July 29, 2013   Retirement Planning

What You Need to Know About Working After Retirement

retirement sign A growing number of Americans are choosing to work into their retirement. Some desire to turn a lifetime hobby into a business, while others need to work out of financial necessity. If you are one of the many Americans planning to work after you retire, there are certain critical factors you must consider.
If you begin to take Social Security retirement benefits before you reach full retirement age, then take a job through which you will earn money above the Social Security earnings limit, your Social Security benefits may be reduced. In some cases, the Social Security administration will even require that you return previously paid out amounts. However, there will be no benefit reduction if you take a job after you have reached your full retirement age. Moreover, you can not be required to pay anything back.
There are also important tax implications of working after retirement. Many retirees pick up odd, seasonal jobs such as landscaping and snowplowing. These retirees may be considered self-employed for income tax purposes. Those who have never been self-employed before should speak with a tax professional about the different tax implications they will face.
Also be aware that although making a little extra money after you have reached your full retirement age will not cause your Social Security benefits to be reduced, it may push you into a higher tax bracket. If your taxable income increases, a larger percentage of your social security income may become taxable. 
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