Strategies While Earning Income During Retirement
• If you file for Social Security before reaching Full Retirement Age , your earned income in retirement could reduce your monthly Social Security benefit . 23 In 2021 , for every $ 2 above $ 18,960 , $ 1 will be deducted from your monthly benefit . Note that you will receive higher monthly benefits after you reach Full Retirement Age if benefits are withheld because of your income .
• Similarly , if you earn a substantial income in addition to your benefits , you might be responsible for federal income taxes . Depending on your tax filing status and total combined earnings , up to 85 % of your benefits might be taxable .
• Know that working during retirement could bump you into a higher tax bracket , causing you to pay more tax on your IRA or 401 ( k ) distributions .
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