In a perfect world, retirement would be simple, straightforward, never complicated by different laws or the archaic and ever-changing tax code, and certainly not a time to worry about money. Unfortunately, this is not a perfect world, and retirement is often clouded by the exact issues that ideally would be avoided in the first place.

A common source of confusion and anxiety in retirement is Social Security and its many rules and regulations. Primarily, what the Social Security Administration (SSA) allows an individual to realize in income without jeopardizing their benefits. For that reason, a quick review of the Social Security income restrictions should go a long way in clearing up any confusion and ambiguity, and most importantly, easing a worried mind or two.

Social Security Income Basics

First and foremost, the Social Security Administration, or SSA, understands that many retirees must supplement their Social Security benefits with additional income to simply make ends meet. To that point, Social Security benefits were never intended to be the sole source of retirement income in the first place, but merely a mandated savings program to set money aside for retirement. However, as the program grew in size and complexity, so did retirees’ reliance on it for retirement income. In its most recent incarnation, the program is designed to replace approximately 40% of the typical worker’s pre-retirement income.

To that point, the SSA understands that many retirees need to work even after they begin receiving benefits and allows a certain amount of earned income on an annual basis without negatively impacting those benefits. However, those amounts are subject to change, typically according to year-to-year inflation rates, so it’s essential to check what the earned income allowance is each year.

Other Sources of Income

Of course, earned income is only one potential source of income in retirement. Other sources, including retirement investment accounts like 401(k)s, annuities, pensions, military benefits, and interest, can produce income but do not affect your Social Security benefits. Obviously, this only magnifies the importance of building retirement assets over the course of your career to minimize – ideally eliminate – your reliance on earned income after your benefits begin.

Have you figured out how to best claim Social Security for yourself (and your spouse) to maximize the benefit? Would you like help to put a plan together for a successful retirement? We’re here to help. Just click here or call (763) 445-2772 to schedule a time to discuss how we can make sure you are getting the most income while paying the least in taxes.