Retire Wise | June 2022

Should You Consider Paid Work to Generate Additional Income in Retirement?

There are many reasons to pursue paid work in retirement beyond generating additional income. Work can provide a social outlet, create structure in your day, and provide a sense of accomplishment. However, in recent months, rising inflation has been the catalyst behind many retirees considering paid work to help offset the loss in purchasing power they’re experiencing at the gas pump, grocery store, local pharmacy and more.

While paid work can be rewarding, keep in mind that working in retirement could impact both your Social Security benefits and the amount you owe in taxes.

For example, if you’re working and taking Social Security retirement benefits before you reach the normal retirement age (NRA), which is 67 for anyone born in 1960 or later, you may receive a temporarily reduced benefit. That’s because for every dollar you earn above a certain income limit, the Social Security Administration (SSA) will withhold some of your benefits. Here’s how it works. If you’re under your NRA, the SSA will hold back $1 in benefits for every $2 you earn from working, above $19,560. However, if you reach your NRA in 2022, the earnings limit jumps to $51,960, and $1 is held back for every $3 you earn until the month you reach your NRA. After that, the earnings limit no longer applies, the SSA stops holding money back due to work, and your monthly benefit will be permanently increased to account for the months in which benefits were withheld.¹

Even if you’ve reached your NRA, and the earnings limit no longer applies to you, work in retirement could result in a higher tax bill. That’s because your earnings may push your income to a level where your Social Security benefits become taxable. However, no one pays taxes on more than 85% percent of their Social Security benefits.² To learn how Social Security benefits are taxed, visit SSA.gov.

If you’re still working after age 72, your tax bill may go up again, when you’re subject to taking requirement minimum distributions from a traditional IRA or 401(k) plan.

Keep in mind that taxes are one of the primary risk factors impacting income in retirement, along with market volatility, inflation and longevity. That makes taxes an important consideration when weighing the benefits of continuing to work, or returning to the workplace, during your retirement years.

If you have concerns about the impact of taxes or inflation on your income in retirement, let’s schedule time to talk.

^{1 https://www.ssa.gov/oact/cola/rtea.html
2 https://www.ssa.gov/benefits/retirement/planner/taxes.html}

Upcoming Travel Plans? Be Sure to Pack These 5 Health Documents

A recent survey reveals that 46% of Americans intend to travel this summer—a level that would have been high before the COVID-19 pandemic.¹ While younger Americans are traveling the most, those over age 55 are also returning to the roads and skies in greater numbers. The survey notes that while worries about the virus have declined as a factor in deciding whether to travel, many travelers still embrace measures intended to mitigate the spread of the virus—from masking on airplanes to choosing destinations and attractions that allow for social distancing.

The last thing most people want to think about when traveling is an illness or injury, yet unexpected events can happen at any time. While you can’t always prevent these circumstances, you can take steps to be as prepared as possible. To help ensure you and the medical personnel treating you have the information they need, gather the following before you go:

1. Health insurance cards for any Medicare, employer-based and/or supplemental healthcare plans that you are covered under
   
   
2. List of medications, including prescriptions and any over-the-counter medications and supplements you take, including the dosages. Be sure to note any drug, food, insect, or environmental allergies, etc.
   
   
3. Proof of any vaccines required for your destination, which may include the COVID-19 vaccine
   
   
4. Medical ID card or bracelet, indicating medical conditions and/or allergies, if applicable
   
   
5. Medical implant and prosthetic device ID cards for stents, artificial joints, pins, plates and other hardware, and devices, such as a pacemaker. Having this information handy can also help facilitate the TSA screening process at the airport.

Be sure to check your insurance coverage with your carrier to determine what is and isn’t covered outside of your local network. Keep in mind, traditional Medicare does not provide coverage for hospital or medical costs outside the United States. However, some Medicare supplement plans provide limited coverage. Certain private insurers also offer short-term health insurance policies designed to cover travel.

Don’t forget to keep emergency contact details handy. If you’re traveling inside the United States, you might add a card in your wallet or your phone’s lock screen with the name, address and telephone number of someone to contact in case of an emergency. If you’re traveling outside the United States, be sure to complete the information page on the inside of your passport with these details.

^{1 Deloitte Summer Travel Survey 2022}

^{This information was written by KRW Creative Concepts, a non-affiliate of the broker-dealer.}