Three Things You Should Know About The Retirement Earnings Test

American Investment Planners LLC

500 North Broadway, Suite 260, Jericho, NY 11753

(516) 932-5130 / (866) 932-5130

Did you know? If you fall under the normal retirement age (often abbreviated as NRA), Social Security typically withholds the benefits you would receive if your earnings exceed a certain amount - this is called a Retirement Earnings Test exempt amount. But let's take a step back for just a moment and answer the question we bet you're asking yourself right now - what is the Retirement Earnings Test (RET)? Ultimately, the RET is a provision that is applied to individuals under the NRA to determine what type of benefits they will receive until they officially reach retirement age.

So what do you need to know?

Say you have already filed for Social Security and then an incredible job opportunity presents itself - should you avoid taking that job? No way! But if you do accept, here are three things you should know before saying yes:

1. If for the entire year that you work you are under retirement age, $1 in benefits will be taken out for every $2 in income that is earned above the annual limit. For 2015, the limit is $15,720.
2. During the year that you reach retirement age, your benefits will be reduced by $1 for every $3 earned above a greater annual limit. For 2015, the limit for this circumstance is $41,880.
3. As soon as the Social Security Administration sees that you are on track to exceed the annual limit permitted, they will likely start to withhold benefits immediately.

Now we know what you're thinking - where do these deductions go? Although you don't receive them at the time, your earnings aren't totally lost; once you reach full retirement age, your Social Security benefit amount will be recalculated. This way, you will likely receive a higher benefit as the years go on.

For more information about the Retirement Earnings Test and how it can affect you, be sure to connect with a member of the American Investment Planners LLC team! We specialize in retirement planning, which means we have all of the information needed to prepare you for collecting benefits whether before, during or after retirement age. 

To speak with one of our team members, please give us a call at (516) 932-5130 today.

Above information courtesy of Emerald Connect