Can You Still Work While on Social Security? The Detailed Guide!
With the quest ” can you still work while on social security?” is a worrying factor and entails a lot. Most people don’t actually want to work after retirement. After all, isn’t the point of retirement to leave your work life behind? But the truth is that if you are trying to live on Social Security, you are not likely to get very far like many of the people who come up a bit short when it comes to the size of their retirement nest egg. To some people, taking on outside work in retirement is not a luxury, but rather a necessity. Read also 31 Major Retirement Threats To Avoid And Retire Comfortably
Ways To Draw Your Retirement Benefits And Working At The Same Time
The big question is, can you still work while on social security? Well, the double-edged sword of Social Security is that if you earn too much outside income, your benefits may become taxable. If you think you might need to work after you start drawing Social Security benefits. Read also 21 Woeful Budgeting Mistakes To Avoid Right Now
Types of Side Gigs You Can Work While On Social Security
Being retired gives you the freedom to work flexible side gigs that you can fit into your schedule. In many cases, you can work a side gig that you actually enjoy and pick up a few bucks without affecting the taxability of your Social Security benefits. Common retirement-age side gigs includes,
√ Craft or tradesperson
√ Virtual assistant
√ Ride-share driver
√ Online tutor
√ Community college lecturer
√ House or pet sitter better still, you can also read 22 Smart Ways To Make Quick And Easy Money Right Now for more side gigs!
If you can find a side gig that is more like a hobby to you than a job, it can help contribute to a successful and enjoyable retirement, not just financially but also emotionally. Read also 31 Major Retirement Threats To Avoid And Retire Comfortably
Social Security Taxability
Below is what you will need to know about how and when your social security benefits become taxable.
1. When Is Social Security Nontaxable?
For many Americans, Social Security benefits aren’t actually taxable. Currently, if your combined income is less than $25,000 as a single filer or less than $32,000 for joint filers, benefits are nontaxable. The Social Security Administration defines “combined” income as your adjusted gross income, in addition to
Nontaxable interest, plus
One-half of your Social Security benefit.
Since the average Social Security retirement benefit as of the beginning of this year is $1,657 or $19,884 per year, this means that if you live off your Social Security check alone, your benefits won’t be taxable. However, a significant rise in your outside earnings could trigger taxes. Read also 3 Key Steps To Becoming Financially Independent For Early Retirement
2. When Is Social Security 50% Taxable?
Single filers earning between $25,000 and $34,000 face a 50% tax on their Social Security benefits. For joint filers, the range is from $32,000 to $44,000 in combined income, as defined above.
3. When Is Social Security 85% Taxable?
Once you cross $34,000 in combined income as a single filer, you will owe taxes on 85% of your Social Security benefits. The same is true for joint filers with combined income exceeding $44,000. Read also 8 Most Essential Things You Need To Know Before Retirement
4. Does it Include Spousal Income?
For purposes of calculating the taxability of Social Security benefits, spousal income is indeed included if you are a joint filer. In other words, even if you are fully retired and don’t work at all, you will have to add your spouse’s income into the “combined income” calculation. This only makes sense, because as a joint filer, your adjusted gross income, which is part of the combined income calculation, includes your spouse’s income. Read also 3 Crucial Things You Must Do After Retirement – Your Future Self Will Thank You!
Ways To Avoid Social Security Taxation While Still Earning Money
Trying to avoid taxation on Social Security benefits while still earning enough to live on can be a delicate balancing act. On the one hand, it makes sense to keep your combined income down so that you don’t have to pay tax on your benefits. On the other hand, the average Social Security benefit of $1,657 per month won’t go very far in most American cities.
The best strategy is to take on small side gigs that keep you under the threshold of taxability as detailed above. Imagine, for instance that you are a single filer and you earn $20,000 per year in Social Security benefits. Under SSA rules, you can earn up to $25,000 per year in “combined income” before you face taxation. Since combined income only takes into account one-half of your Social Security benefits, this means you can safely earn $14,999 per year in outside income and still avoid taxes on your benefits. This would bring your total income for the year up to $34,999, and you still wouldn’t have to pay taxes on your Social Security. Read also 4 Easy Ways To Avoid Wasting Money In Retirement – A Sure Way Solution To Running Out Of Money In Retirement
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