Retired Americans are feeling the pressure of returning to work due to rising prices and the COVID-19 pandemic. But reentering the workforce while earning Social Security benefits could have consequences. We’ll take a look at the obstacles retirement-age Americans are facing and what they can do to safely secure their Social Security benefits.
A financial advisor could help you create a financial plan to protect your investments and identify new opportunities to make money.
What Retirees Are Saying
Many retirees are considering going back to work to keep up with their expenses. A recent CNBC All-America survey revealed that 68% of retirees said they would consider coming out of retirement. Due to the COVID-19 pandemic, 62% of retirees said they left the workforce earlier than planned.
Some older Americans are accessing their retirement benefits early, as well. According to a recent Nationwide Retirement Institute Survey, over 1 in 4 Baby Boomers (26%) who are not currently receiving Social Security benefits are planning on filing for benefits early while continuing to work.
If older Americans are looking for work, there are more opportunities available. The labor market has continued to show signs of growth in the middle of 2022. The latest Bureau of Labor Statistics (BLS) nonfarm payroll employment report showed that 528,000 jobs were added in July 2022.
Unretiring While Collecting Social Security
Coming out of retirement to work again while earning Social Security benefits will increase your monthly earnings in the short term. It would also help you keep up with your expenses with less fear of falling behind.
In the long run, though, you want to make plans before working while earning Social Security benefits. If you don’t, you could be subject to an earnings penalty. And that ultimately lowers your Social Security benefits.
Don’t Make These Three Social Security Mistakes
Before you commit to unretirement, you want to consider a few factors. You need to know when you reach full retirement age (FRA), so you can get full Social Security benefits. The FRA range is either 66 to 67, depending on when you were born between 1955 and 1959.
Knowing your FRA will help you avoid a penalty with your Social Security benefits if you do decide to work at the same time.
When making a final decision, there are three Social Security mistakes you want to avoid:
- Forgetting to contact the Social Security Administration (SSA) before you return to work. Let the SSA know that you are going back to work, so it can help you readjust your benefit. While reducing your check doesn’t sound great, it will help you avoid an earnings penalty.
- Filing for Social Security benefits too early. Filing at the age of 62 when you don’t meet the FRA will prevent you from earning your full Social Security benefits. If you do find yourself in this situation, you can withdraw within 12 months of your Social Security application. Or you could pay the SSA all the benefits you collected to gain full benefits when you are eligible at age 66 or 67.
- Not knowing your Social Security benefits estimate. Understanding how much money you are expecting when you receive Social Security is crucial to your retirement planning. SmartAsset’s Social Security calculator can give you a good idea of what you will receive once you retire.
The Bottom Line
Social Security benefits are critical to everyone’s financial wellness in retirement. Making sure that you are earning full benefits after all the hard work you put in over the course of your career means a lot. If you want to work again while earning your Social Security benefits, make sure you contact the SSA. Completing this task will help you stay on the right track.
Tips for a Financially Successful Retirement
- Planning for retirement can be quite an undertaking. Many of us aren’t equipped to handle it alone. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Having a retirement age in mind can help you plan out your savings. You want to make sure you’re saving at the right rate to support yourself in the future. And that might require taking advantage of your employer’s 401(k) matching program. It’s essentially money already owed to you that can make a difference in your long-term savings.
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