Work provides income, personal satisfaction, and may increase your Social Security benefits. However, it’s important to understand how the Retirement Earnings Test (RET) could affect your benefits.
My name is Jacob Merk, Vice President of Investment Strategy with Provident Financial Consultants.
Let’s get back to how the RET affects yours Social Security benefits. if you begin taking benefits prior to your full retirement age and continue to work, your benefits will be reduced by $1 for every $2 in earnings above the prevailing annual limit ($21,240 in 2023).
If you work during the year in which you attain full retirement age, your benefits will be reduced by $1 for every $3 in earnings over a different annual limit ($56,520 in 2023) until the month you reach full retirement age.
After you attain your full retirement age, the RET will not apply anymore and your earned income no longer reduces benefit payments.
I’m not saying you should or shouldn’t work during retirement, this is just something to factor into your decision as you are deciding when to take Social Security benefits. If you have any questions, you’re welcome to reach out and we can walk through your retirement plan together.