Working While Receiving Social Security Benefits

Working While Receiving Social Security Benefits

Retirement is something most people look forward to in the United States. This is because it offers them the opportunity to travel, spend time with their families and essentially relax. All that is possible because most people are going to qualify for Social Security benefits. However, some individuals, especially those who used to run their own business, may find retirement to be a little too dull for their liking. As a result, many will often go looking for part-time work to either have something to do or supplement their monthly income. But how much does this affect your Social Security benefits? Read on to learn about this very important topic. 

How Your Social Security May Change 
As stated above, beginning to work full or even part-time can drastically affect your Social Security benefits. Although there are various factors that the government will take into consideration before making any changes, it is still good to know the potential changes that may benefit you. Below are a few of those potential changes: 

  • Your benefits will vary depending on your age
  • Your Social Security benefits may be reduced depending on your new income.
  • The types of benefits may be eliminated or altered to account for your new income.

Understanding Full Retirement Age
One of the most common terms you will hear when considering opting in for Social Security is “Full Retirement Age.” This is because although you can certainly accept Social Security at 62, your benefits may be reduced depending on your birth year. What this means is that depending on the year you were born and the laws during that time, your “full retirement age” will matter greatly in terms of how much you get. For example, someone born in 1937 or earlier will reach full retirement age of 65 rather than today’s 62. Why does this matter so much? It matters because if you are legally at full retirement age, you can work and earn as much as you want without being penalized by the government. 

Working Before Full Retirement Age
If, unfortunately, your birth year law states that you are not considered to be at “full retirement age” just yet, you will have to be careful about how much you earn each month. According to the Social Security department, individuals who are not at full retirement age and are currently working full or part-time can only make $1,580 per month or $18,960 per year. If you go beyond that limit, your benefits will decrease by one dollar for every two dollars earned over the limit. That is why it is highly recommended to keep a detailed record of how much you are earning through regular wages and yearly bonuses, as they will also be considered part of your income. 

Social Security Earnings Limit for 2021
Earlier, we spoke about the fact that those who are at full retirement age can earn as much as they want without fearing a reduction in their benefits. However, things are going to be very different if you are reaching full retirement age within the year 2021. This is because now there will be an earnings limit imposed amongst many other changes. The new earnings limit for individuals who will be reaching full retirement age and receiving Social Security will be $4,210 per month or $50,520 a year. After every one dollar that is earned, three dollars will be reduced from your monthly Social Security check. 

As you can see from the information above, several factors must be taken into consideration when deciding to return to the workforce. Although each person’s circumstance & experience will dictate how much or how little of their benefits are changed, much of the rules imposed by the Social Security department are universal.

Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.

3 Questions You Should Ask Yourself Before You Retire

3 Questions You Should Ask Yourself Before You Retire

Retiring is the goal of every worker who dreams of  leisurely breakfasts and time in the garden. However,  getting to retirement takes some financial effort and  strategic planning. The reality of having no job means  that you’re on your own when it comes to every facet  of your financial life. Before you send in that letter of  resignation, get familiar with the top questions that you  need to ask yourself before retiring. You’ll have less  stress as a result of these well-answered questions. 

What’s Your Plan For Healthcare? 

When you’re working, your employer’s coverage keeps  you healthy with reasonably affordable policies. All of  that changes when you retire, however. Ask yourself if  you have a plan for healthcare coverage. Ironically, the  time of your life when you really need healthcare  coincides with the lack of an employer’s policy.  

Luckily, the federal government offers Medicare. From  the moment that you turn 65 years of age, you can  take advantage of this program. It covers the bulk of  your medical needs, and there are supplemental  programs for options that you care to invest in.  

COBRA insurance coverage is possible between your  employment period and signing up for Medicare, but it  only lasts for up to 18 months. It can also be very  expensive because the employer isn’t paying for part of  the cost. Ideally, you’ll want to rely solely on Medicare  while looking for supplemental programs to cover  speciality items, such as vision.

What Will Your Income Include? 

On average, Social Security will cover about 40 percent  of your income in the golden years. You can start  payouts as early as age 67, but many retirees choose  age 70 because there’s a higher monthly payout as a  result of waiting. Your retirement savings must cover  the bulk of the remaining shortage. 

Many financial experts teach the concept of the 4- percent rule. In essence, you can take 4 percent of  your funds from a retiring account each year, and you  should still have enough money to cover your  remaining years. There are other calculations to  consider, such as understanding how much money  you’ll need each month in these relaxing years.  Although some experts believe that you can live off of  70 or 80 percent of your previous earnings, it’s ideal to  shoot for a comparable income as earned during your  working days. With this tabulation, you have extra  funds for hobbies and traveling. 

Do You Have Plans For Your Time Off? 

Planning for your golden years also means that you  need to fill the time that is now open to you. Isolating  yourself from your social network at work can be  detrimental to your health. Make rough plans for your  golden years because filling the time can be a  rewarding prospect. Volunteer with charities, help out  the family or get a part-time job. Working as a  consultant with your previous employer might be an  option that keeps you connected while still enjoying the  spoils of retiring in your 60s. 

It’s natural to try new things, but then you’re not too  thrilled with them. Continue to explore as you grow  older because you might find a hobby or talent that  sparks creativity in your mind. Many retirees find  themselves starting a business as they learn how to  offer a product or service that counts in the  neighborhood. 

Stay updated with your retirement plan by logging into  your funds regularly. By knowing how much you have  and where it will be allocated gives you a clear view of  your retirement pathway. Retire with confidence that  your plans will stand the test of time as opportunities  spread out ahead of you.

Does your plan meet all your retirement needs? Schedule an appointment now with one of our advisors for a complimentary review of your retirement plan.

The Good and Bad of Retiring Early

The Good and Bad of Retiring Early

This year has forced some to think about retiring early. When it comes to retiring early, some of the benefits are obvious! You get to live your life without the constraints of work, and you are able to pursue your own interests. But there are other good reasons for retiring early, and there are some reasons why retiring early is not the greatest idea.

Your Dedication is Gone
One of the good reasons to retire early is that you are simply not dedicated to working anymore. When you are no longer emotionally interested in working, your performance deteriorates and your company suffers.

Working Took its Toll
In some professions, such as construction and law enforcement, the physical and emotional demands of the job can become too much over time. After a few years in a high risk profession, your body and mind have simply had enough and it is time to go home and rest.

Your Finances Become More Flexible
Most people do not realize how expensive it is to work until they are no longer working. When you work any job, you incur expenses such as wear and tear on your car, transportation expenses such as gas or bus passes, work clothing costs, daycare and miscellaneous medical costs for work-related injuries. If you have planned your finances to allow yourself to retire early, then you will find that your money goes much further when you are not working.

Your Health Could Suffer
For some people, retiring early means abandoning the daily physical activity working required and giving up a big piece of their identity. Retiring early can cause physical and mental problems that could become very serious over time.

You Lose Your Social Circle
After years of working, you tend to take for granted the notion that you will see most of your friends at work five days out of the week. Even people who think that the people they work with are only acquaintances suddenly find that the loss of the social circle they developed at work is devastating.

You Didn’t Plan Well
When you retire before the age of 65, you run the risk of losing out on health insurance. Medicare automatically kicks in for every American when they turn 65, but what would you do until that age? Did you plan your retirement finances right, or will you run out of money? Many people forget to take inflation into account when they plan their retirement, and that makes retiring early financially dangerous.

There are two sides to every story, and that includes the story that goes with retiring early. The idea of walking away from work before the age of 65 can sound appealing, but there are plenty of variables to consider before you make that decision. If you do want to retire early, then talk about it with your family and ask your financial adviser if you have structured your savings properly to be able to live without a paycheck for the rest of your life.

Doug Ybema- Grand Rapids Office https://go.oncehub.com/DougYbema

Randy Knapp- Okemos Office https://go.oncehub.com/IntegrityFinancial





Avoid Overspending During the Holidays

Avoid Overspending During the Holidays

It is not surprising that the holiday season is one of the most expensive for individuals. Giftgiving, decorating and holiday treats can tap into the budget if a few general rules are not followed. Here are five tips to avoid overspending this holiday season.

Set a Strict Budget
To alleviate the stress of spending over the holiday season, a strict budget should be set even before the holiday season begins. If a person is giving gifts to a few individuals, their names can be written down and a budget planned for each individual. A decision should be made on how much to spend and how many gifts will be given. A budget should also incorporate holiday spending on food and decorations. It is easy to get into the festive mood during the holidays but that is when overspending creeps up on a person and they spend more money than they should.

Avoiding Retail Tricks
When a person decides to shop for items, it is easy to get tricked by retail stores. Even when a budget is firmly in place, many people tend to overspend. While it all comes down to discipline, retail stores are good at enticing money out of people’s wallets. When shopping smart, a person should watch for decoy pricing, loyalty cards and loss leaders. Often, a retail store will entice a buyer with a low-priced item. Unfortunately, that item will be sold out and require a person to spend even more money. However, there is a good way to save money when shopping for gifts. Gift cards are often discounted at chain stores such as Office Depot, Best Buy or Costco. Using these as gifts can help save a few extra dollars.

Track Every Penny
One of the secrets to keeping a budget is to keep track of spending every day. While this is true throughout the year, it is especially important when a holiday season rolls around. Overspending during the holidays can quickly occur when a person is in a joyous mood or feels like they can splurge. Free online software that helps with budgeting can be used to track expenses or a simple pen and paper pad.

Spending On Yourself
It is easy to do when a person is out shopping for others–they see something that they like and treat themselves. In fact, statistics indicate that about 60 percent of individuals are giving themselves gifts during the holiday season. This can be limited by following an overall budget and writing down specific items to be bought when shopping online or in a brick-and-mortar store. Another caveat to watch out for is the purchase of gift cards. Over 70 percent of people shopping for gift cards will also purchase one item or more for themselves. Discipline must be followed so that a person does not overspend.

Set Limits on Spending
If a person’s budget is tight, they shouldn’t feel guilty about purchasing less than in previous years, or not at all. Living comfortably without stress is much more important than handing out material goods. If a person’s budget is tighter than other years, they should decide early on how many gifts they are going to give. Setting limits also includes spending money on holiday decorations or food. It can all be budgeted.


What You Need to Know About IRA and 401k Contributions In 2021

What You Need to Know About IRA and 401k Contributions In 2021

The Internal Revenue Service recently reported changes to the 401k and IRA. The agency’s announcements to Congress issues new regulations. Each alteration will impact retirement accounts and 401(k) contribution limits in 2021. Here are a few things Americans need to know regarding their announcement.

Most will want to wait for more detailed information from the IRS before taking any action. It would be best to learn as much as you can about the forthcoming changes. They will likely affect any significant decisions.

What Savers Can Expect
Most 401(k), 403(b), 457 plans, and Thrift Savings Accounts will be within the same framing as before. The current rules would allow people age 50 and over to save money $19,500, or $26,000 out of a traditional IRA. Likely, regulations will not change for SIMPLE retirement accounts. They typically maintain $13,500 contribution limits. The IRS allows individual retirement account contribution limits to remain at $6,000. Additional catch-up contributions for older contributors will also stay at $1,000.

There are a few changes that the IRS has announced regarding IRA and 401k contributions for 2021:
Tax Deduction Phase-outs for Traditional IRA Contributions
Taxpayers will be able to deduct traditional IRA contributions. To qualify, recipients may not participate in employer-sponsored retirement accounts. They also may not make above earnings limits. This change subjects employees to reduced or eliminated deductions. It also includes spouses covered by the same plan as the primary recipient.

There are a few other changes to be aware of when it comes to IRA and 401k contributions. Currently, making both employer and self-directed contributions to both accounts are workable. However, they may no longer be tax-deductible. The IRS will look to cut some of the current restrictions on Roth IRA contributions.

2021 Phaseout Ranges
In 2021, single taxpayers must consider the phaseout range will increase by $1,000. Ranges for spouses who file jointly with coverage from employer-sponsored plans have changed. It is now $66,000 to $76,000 and is set at $105,000 to $125,000. Limits to Couples’ workplace plans that only cover spouses individually are necessary. The traditional IRA contribution will require a higher phaseout range. The changes to IRA and 401k regulations are not necessarily the same for every situation. If separate plans cover both spouses, the range is consistent with 2020, remaining at $0 to $10,000. Look at the IRS publications for the most current regulations. Info regarding other aspects specific to your overall financial situation. 

Roth IRA Contributor Prerequisites
Some of the changes include income limits for Roth IRA contributions. Their income phaseout ranges for 2021 include the following.

Roth IRA phaseout ranges:

• Single and heads of households – $125,000 to $140,000 (an additional $1,000 from 2020)

• Married couples who file jointly – $198,000 to $208,000,

• Married couples filing separately – $0 to $10,000 (unchanged)

Saver’s Credit income limits:

• Low- and moderate-income couples file jointly – $66,000 (an additional $1,000 from 2020)

• Heads of the household – $49,500

• Single individuals / married filing separately – $32,500

Rules for IRA and 401k contributions, when first released, will underline many adjustments. It is up to you to stay updated. If you are curious about what is in store for you, it is always wise to be alert. Remember, tax changes happen every year. The IRS has to release any changes to the public before they become active.

Source: https://www.marketwatch.com/story/401-k-and-ira-changes-for-2021-where-and-how-can-you-contribute-next-year-11603748200

Tap Your 401(k)? Get Back On Track!

Tap Your 401(k)? Get Back On Track!

While tapping into your 401(k) is not the first choice that you should make, it is sometimes unavoidable. During the most recent economic crisis, you may have needed to withdraw from your retirement funding in order to make ends meet or cover certain types of expenses. The good news is that you can recover from this in the long run with some prudent actions right now.

The first thing you can do is to immediately begin contributing the maximum amount allowable to your 401(k). This will not only maximize your tax savings, but it can also take advantage of the employer match. In fact, when you do not grab every penny that you can from your employer, you are leaving money on the table. Of course, there are limits to the amount that your employer will match.

While your 401(k) investment options are limited to what your employers offer, there are ways to play catch-up to make up for some of what you lost if you had to withdraw from your account.

You can periodically shift between bonds and stocks depending on your feeling about the market. For example, if you are using an 80-20 split between stocks and bonds, you can go 90-10 when the market has dropped, so you can try to time the market. Then, you can reallocate your portfolio when the market rises again. However, we caution against doing that with more than a small part of your portfolio.

If you tapped into your 401(k) by taking a loan, you should pay it back as quickly as possible to recover account value. When you have a 401(k) loan outstanding, that money is not invested in the stock market and earning returns. The hope is that you are able to pay the money back as opposed to a straight withdrawal so you can avoid having to pay taxes on the money you took out of your account.

Finally, another thing that you can do to get your retirement plan back on track is to take advantage of the ability to make catch-up contributions to your 401(k) when you turn 50. The law allows you to give up to make a special contribution beyond the money that you are already allowed to set aside. For 2020, this amount rises to $6,500. While you may not receive an employer match on this money, it is a way to contribute additional money to your retirement from your pre-tax dollars. When you take advantage of catch-up contributions each year until retirement, it could add hundreds of thousands of dollars to your nest egg.

Before you take money out of your 401(k), you should have a plan for getting your retirement back on track. You will need to make sure that you are disciplined and return to saving at the first possible opportunity. The most important thing to remember is that a dollar today grows several times over thanks to the power of compounding. To the greatest extent possible, you do not want to miss out on that. We are here to help guide you to a plan that fits your desired future, contact us today.