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Does My Retirement Income Qualify For Social Security Benefits?

One of the most crucial decisions you will need to make while creating your retirement plan is when to start receiving Social Security benefits. Knowing what could raise or lower your benefit amount comes in second. Does Social Security consider retirement income to be income? Not at all, however working while receiving benefits may limit how much you can get. One way to make the most of your Social Security income in retirement is to speak with a financial counselor.

Comprehending Social Security Benefits

The purpose of retirement benefits from Social Security is to give qualified seniors an additional source of income. As early as age 62, you can start receiving Social Security retirement benefits, however, the amount you receive will decrease if you do. Conversely, delaying benefit start until age 70 can boost your benefit amount. Benefits are computed using your past earnings data. In particular, earned income, wages, and net earnings from self-employment are taken into account by Social Security. Since you are contributing to the system, Social Security will cover any amount deducted from your earnings for FICA or Social Security taxes. Social Security calculates your eligibility for benefits based on your average monthly indexed earnings at the time of application. Your PIA (primary insurance amount) is determined by averaging your indexed earnings over a maximum of 35 years. The benefits you receive after you retire are decided by the PIA.

Collecting Your Social Security Benefits

Retirement income has no bearing on your Social Security benefit amount and is not considered income. In particular, the following are not included in income according to the Social Security Administration:
Pension benefits
Payments for annuities
Dividends or interest from investments and savings
Social Security does not consider any of them to be earnings. Once more, Social Security only considers the real income you get from employment or self-employment. This implies that you could be receiving payouts from an annuity, withdrawing funds from an IRA or 401(k), and collecting Social Security benefits all at the same time. Your Social Security payments and Medicare eligibility are unaffected by reverse mortgages. Reverse mortgages allow you to access the equity in your house, but rather than paying the lender back, they pay you back. As long as you reside in the house, you are not required to make any repayments towards the reverse mortgage. Many seniors decide to use reverse mortgages to augment their Social Security benefits.

Depending on your age and income, working while receiving Social Security benefits may result in a reduction of your monthly benefits. Once you start collecting benefits, you are deemed retired under Social Security regulations. For every $2 you make over the annual cap while working and below full retirement age, Social Security may take $1 regarding your benefit payments. The cap is set at $21,240 for 2023. The deduction drops to $1 for each $3 earned beyond a separate yearly cap in the year you reach full retirement age (FRA). The cap is set at $56,520 for 2023. No matter how much you earn, your benefits are never decreased once you reach full retirement age.

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