Dear MarketWatch,
I am 67 and have not yet received Social Security benefits.
I am still working. In July 2023, I even got a $30,000 raise. I'm trying to save for my retirement. With my new salary I can afford to put more into my government savings plan, but of course I know I'll never make up for all those years I couldn't contribute. I receive a pension from my government institution.
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I thought maybe I would take my social security now, pay my bills with it, and take money from my paycheck to put into my government savings plan. I am allowed to contribute up to $30,000 per year as pre-tax catch-up. I have $25,000 in my government savings plan. It's not much, but I'm saving. I don't have a financial advisor because no one is going to make a total investment of $25,000; it should be much more than that.
Can you make recommendations?
Trying to save
Best try,
You are trying and it is significantly better than giving up on your retirement savings goals – please remember that.
As for your Social Security, the good news is that you are past full retirement age, so you are getting more than 100% of the benefits you are entitled to. The questionable news: While you'd get more benefits, if you're still working, you'll also have to pay more for that money.
There's no rule that says you can't claim Social Security while you're still working, but you should consider the impact this can have. For people who are not yet of full retirement age, their benefits may be temporarily reduced (although they will get that money back). This doesn't apply to you since you're past FRA, but it's important to note for any fellow readers who may not have reached that milestone yet.
What shall However, taxes affect you. If your combined income, which is your earned income plus 50% of your benefits, is between $25,000 and $34,000 per year for single filers or between $32,000 and $44,000 per year for married filing jointly, Social Security benefits may be taxed up to 50 %. %. For single filers with an annual combined income of more than $34,000, or more than $44,000 for individuals who are married and filing jointly, the percentage of taxable benefits increases to 85%, according to the Social Security Administration.
You said your raise was $30,000, and you can put a maximum of $30,000 into your government plan. If you were living comfortably before your raise, consider putting more into your retirement plan, as you may not feel it as much as you did before the raise. Of course you have to live, so contribute as much as you can without putting yourself in a dangerous situation.
You may not have as much in your retirement savings account as you would like, but you will also receive a pension, which is not common these days (at least not for private sector workers). If you wait to claim Social Security benefits, you'll get up to 8% per year, which you'll defer until age 70. That extra money can certainly help you pay bills in the future, and could mean you pay less tax now. .
What matters most is what you do now to take care of yourself in the future. There are so many reasons why people can't contribute to their retirement plans: cost of living, raising a family, education, health expenses, emergencies and so on. That you're doing the numbers now and still working (and with a raise, no less) puts you in a good place to optimize your strategies for your later years.
