In the lingo of Social Security, “full retirement age” is the age at which you’re entitled to get full or unreduced retirement benefits. Currently, that age is sixty-six.
But what happens if you start drawing Social Security benefits before you reach full retirement age? If you do, you could lose a lot of money. Luckily your 401(k) can help you salvage some of the situation.
You’ll learn how when you read my new article titled Tax Tips: 401(k) Reduces Penalty on Social Security Benefits.
Three ways our fact-filled article can help you:
- We’ll explain the problem you’re up against. If you start drawing Social Security benefits before you reach full retirement age you lose fifty cents on the dollar for every dollar that exceeds the $14,650 earnings limit. But if you know what you’re doing, you can make certain contributions to your 401(k) that will let you avoid those stiff 50% penalties! We’ll explain this in easy-to-understand language when you read the full article.
- We’ll teach you the tactics you need to use. It doesn’t matter whether you’re incorporated or not. Either way, the employer contribution to the 401(k) does not count as earned income (to the owner-employee or the self-employed person). That contribution also doesn’t count against the Social Security earnings limit. You’ll get the whole story when you read the full article.
- We’ll tell you what happens when you reach full retirement age. When you do, Social Security increases your monthly benefit to reflect the money you lost to the $14,650 earnings limit. If you live to Social Security mortality age, and we certainly hope you do, you essentially regain what you lost to the earnings limit. But if you don’t live long enough, you lose some money… but you won’t be worrying about it. We’ll give you the details when you read the full article.