Make sure to check the IRS and SSA for the latest information!
Retirement planning is stressful enough without having to worry about all the rules and regulations regarding benefits and income. Our goal is to help you understand these limits and tax implications better so that you can make the most of your retirement.
We have to add a small disclaimer that this blog is for informational purposes only and not intended to provide any financial or tax advice. It's always best to work with a licensed financial advisor or tax professional for your specific situation, but we hope you still take away value from it!
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If your only income comes from benefit payments, you won't have to pay federal income taxes on those benefits. However, if you have other sources of income, here's what you need to know (based on previous years):
If you’re filing as a single person:
If you’re married and filing jointly:
If you’re married but filing separately and lived with your spouse at any time during the year, up to 85% of your Social Security benefits could be taxable regardless of your income.
Now onto everyone's favorite topic...taxes (kidding).
The IRS offers a larger standard deduction for individuals aged 65 or older.
If you're a single filer, your standard deduction increases by $1,650.
If you're married and filing jointly, each spouse’s standard deduction increases by $1,350.
For detailed information, refer to the IRS' Publication 554.
Not all Social Security benefits are taxed.
The taxable amount of your Social Security benefit will depend on your provisional income, which includes wages, taxable and non-taxable interest, dividends, and half of your Social Security benefits.
At age 72, you're required to start withdrawing required minimum distributions (RMDs) from traditional IRAs and other retirement accounts.
These withdrawals are taxable and included in your adjusted gross income (AGI).
The amount you need to withdraw is based on your account balance and life expectancy.
Failing to take the required distribution can result in a 50% tax penalty on the amount you didn't withdraw.
Are you still with us? We know this information isn't the most exciting, but here are some questions you might have.
Yes, you can receive Social Security retirement benefits while working!
However, if you are under your full retirement age, the amount you earn can reduce your benefits.
Once you reach the normal retirement age, you can earn any amount without reducing your Social Security retirement benefit. Your benefits will no longer be withheld based on your earnings.
Access the free Retirement Earnings Test Calculator from the Social Security Administration here!
Taking Social Security benefits at age 62, the earliest possible age, results in reduced benefits.
However, once you reach full retirement age, the withheld benefits are recalculated, potentially increasing your monthly benefit amount.
When you retire, the amount you can earn without impacting your Social Security benefits depends on your age and when you reach your full retirement age (FRA).
Besides Social Security, your retirement income may include:
There are also tax implications for withdrawing from your retirement accounts.
Here's a quick overview:
You might choose not to take withdrawals from your Roth IRAs for several reasons:
Gifts and inheritance can also affect your retirement income:
2024 Gift Tax Rules:
If your benefits aren't going to cut it, these are some great side hustle ideas for retirees:
1. Self-Publishing on Amazon
2. Tutoring or Teaching
3. Freelance Writing
4. Pet Sitting or Dog Walking
5. Crafting or Selling Homemade Goods
6. Consulting
Yep! Self-publishing can lead to some pretty cool things, like funding an expensive sailing hobby, spending way more time with your kiddos, and...retiring in your 40s.
Just ask this couple:
These experiences are from our most successful students; their success should not be considered typical. Student earnings vary based on effort, experience, and other factors. Many students don't apply our strategies and thus see little to no financial return. We cannot guarantee success or any specific financial result.
Option A: Join thousands of AIA students taking full control over their income and schedules.
Option B: Visit the introduction video that shows you exactly how a total beginner can go from someone with zero publishing or tech experience to a business owner making recurring income online.