Working while collecting Social Security: The slow fade to retirement more people are choosing - Yahoo Finance

Summary

Claiming Social Security while still working isnt an outlier these days.

Its pretty common, according to a recent report by the Center for Retirement Research at Boston College, which found that 2 in 5 people combine work and benefits for at least some period of time.

Count among them Sharon Smi…

Source: Yahoo Finance

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Q1: How common is it for individuals to work while collecting Social Security benefits, and what are the implications of this trend?

A1: According to a recent report by the Center for Retirement Research at Boston College, about 40% of individuals combine work with Social Security benefits at some point. This trend reflects a shift in retirement patterns where people opt for a gradual transition rather than a full stop. It has implications for retirement planning and financial security, as it affects both current income and the timing of benefit collection.

Q2: What are the recent changes in policy regarding Social Security and working retirees in the United States?

A2: Starting in January 2024, changes implemented under the Social Security Fairness Act of 2023 mean that pensions from work where Social Security taxes weren't paid will no longer reduce Social Security benefits. Additionally, benefits will not be reduced for earnings post-full retirement age, although earnings before this age can still impact benefits.

Q3: What is the projected trend in labor force participation among older adults, and how does this affect retirement planning?

A3: The labor force participation rate for individuals aged 75 and older is projected to exceed 10% by 2026. This ongoing participation affects retirement planning by introducing complexities in optimal annuitization and income management, as retirees balance labor income with traditional retirement benefits.

Q4: How does continuing to work post-retirement influence the decision-making process for annuitization?

A4: Recent research models suggest that post-retirement labor income can act as a substitute for annuitization, providing a stable alternative income source. This affects the timing and necessity of annuitization decisions, as having labor income may delay or reduce the need for annuities.

Q5: What are the economic factors that influence retirees' decisions to continue working while receiving benefits?

A5: Economic factors such as personal wealth, the desire to maintain a certain standard of living, and the availability of part-time or flexible work options influence the decision to continue working. Additionally, policy changes and benefits calculations play a role in this decision-making process.

Q6: What is the impact of government income support on retirement decisions, particularly for low-income individuals?

A6: For low-income individuals, government income support is crucial in making retirement feasible amidst income disasters. Research indicates that sufficient support can delay retirement, as individuals rely on this additional income to bridge gaps and secure financial stability.

Q7: How do recent changes in Social Security policy affect the financial planning of future retirees?

A7: Recent policy changes, such as the elimination of the Windfall Elimination Provision and the Government Pension Offset, enhance benefits for those with non-Social Security taxed pensions. This provides greater predictability in retirement income, allowing for more strategic financial planning.