Everyone, including Lockheed Martin retirees and current employees, must make applicable Social Security contributions on income, even if you are working past your full retirement age. Working past your full retirement age may also increase your Social Security benefits because Social Security contributions continue to be paid. You must be care though, because continuing to work may lower any current payments taken during the year in which your full retirement age is reached, according to a Social Security Administration limit.
Let’s say that you reach your full retirement age in July. Your total benefit income earned from January to July must be below the stated Social Security limit of $51,960 for 2022, or your benefits will be lowered by $1 for every $3 of income over the limit.
Allianz Life Insurance Company of North America 2022 Tax Summary Sheet
The additional dollars paid are held by the Social Security Administration and repaid over time once the taxpayer retires. It is important to note that there are no limits on income earned past the month in which full retirement age.
Beware, taking Social Security benefits while still working may have the unexpected negative consequence of bumping a you into a higher tax bracket. Most people forget that their Social Security benefits may be taxed—up to 85%—depending on their filing status and combined income, including half of their Social Security benefits.
In addition, some states also tax Social Security benefits. There are currently 13 states in that also tax your Social Security benefit: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia. To learn more, you will need to check with the state tax agency.
If you are continuing to work, you are not required to pay any Social Security tax past the wage base limit, which is $147,000 for 2022. So, if you earn $147,000 or more, the most you will pay in Social Security tax is $9,165. If you make less than $147,000, then your Social Security tax will be less.
Whether or not to continue to work or when to start receiving your Social Security benefits are certainly questions that can be discussed with your financial advisor. If you don’t have one, we do! We have Lockheed Martin specialists who are well educated in your benefits and in the art of financial planning. Click here or call 817-210-3444 to schedule a complimentary consultation today.
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Be sure and check back next week for more incredibly valuable information. Cheers!
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This blog is being provided and sponsored by Strittmatter Wealth Management Group, LLC. Lockheed Martin and its subsidiaries do not endorse, recommend, or make representations with respect to any information, advice, services, or products discussed in this blog.
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