thianchai sitthikongsak · Getty Images
Retirement doesn’t have to mean completely leaving the workforce. If you need extra money or get bored, you might take on a side hustle.
This can be a great choice, but proceed with caution to ensure your earnings don’t impact your Social Security benefit.
Your Retirement Age Is Part of the Calculation
If you’re under full retirement age — 67 years old, for those born in 1960 and after, per the Social Security Administration (SSA) — you can earn up to $24,480 per year — in 2026 — at your side hustle, before your benefits are reduced, according to the SSA. In this case, $1 is deducted from your benefit payment for every $2 earned above the annual limit.
In the year you reach full retirement age, the limit on your earnings increases to $65,160 — in 2026. For every $3 you earn above this limit, $1 is deducted from your benefit payment.
The good news is, when you reach full retirement age, you can earn as much as you want without any impact to your benefits.
Protecting Your Assets By Withdrawing Your Benefits
If you’re able to swing it — and you’re under age 70 — withdrawing your Social Security application while working a side hustle is worth exploring.
This is a way to maximize your benefit for when your income stops completely, said Justin Pritchard, certified financial planner (CFP) and founder of Approach Financial. You’ll get the two-fold advantage of receiving a larger benefit due to delaying its start date and allowing your benefit to increase as you continue working.
“It might work well to get those increases from waiting and just live off your income and savings,” he said. “You’ll get a bigger guaranteed income for life and you might pay less in taxes, depending on the situation.”
If you’ve already applied for benefits, it might not be too late to hit pause.
“Withdrawing is only possible within 12 months of starting benefits, and you need to repay all of the benefits you received,” Pritchard said. “So, the strategy might not be feasible for everybody.”
He also noted that withdrawing or suspending benefits can affect a spousal benefit, so do your homework before making a decision.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion:
