July 17, 2024

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Does My Retirement Income Count as Income for Social Security?

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Man looking at taxes from his social security

Deciding when to take Social Security benefits is one of the most important questions to answer in planning your retirement strategy. Second to that is understanding what might increase—or reduce—your benefit amount. Does retirement income count as income for Social Security? No, but working while claiming benefits could shrink the amount that you’re able to collect. Talking to a financial advisor can help you to maximize Social Security benefits in retirement.

Understanding Social Security Benefits

Social Security retirement benefits are designed to provide a supplement source of income to eligible seniors. You can begin taking Social Security retirement benefits as early as 62, though doing so can reduce the amount you receive. Waiting until age 70 to begin taking benefits, meanwhile, can increase your benefit amount.

Benefits are calculated based on your earnings history. Specifically, Social Security considers earned income, wages and net income from self-employment. If any money is withheld from your wages for Social Security or FICA taxes, then your wages are covered by Social Security since you’re paying into the system.

When you apply for benefits, Social Security uses your average indexed monthly earnings to decide how much you qualify for. This average is based on up to 35 years of your indexed earnings and it’s used to calculate your primary insurance amount (PIA). The PIA determines the benefits that are paid out to you once you retire.

Does Retirement Income Count as Income for Social Security?

Retirement income does not count as income for Social Security and won’t affect your benefit amount. Specifically, the Social Security Administration excludes the following from income:

None of these are considered earnings for Social Security purposes. Again, Social Security only looks at money that you actually earn from working a job or being self-employed. That means that you could collect Social Security…



2024-06-20 16:00:20

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