Social Security Income Limit: What Counts As Income?!

(don’t forget to checkout the video of this blog too)

As many of you know, I am a fan of delaying Social Security in retirement (not only tax mitigation in retirement but for your legacy goals as well).

Now that might mean delaying until full retirement age (or taking the guaranteed 8% annual increases until age 70).

Either way, waiting to collect social security is a great way to maximize your guaranteed income in retirement. ️

It’s also a great way to protect your retirement income from the negative effects of inflation.

Sometimes, as part of your retirement plan it might actually make sense to start collecting social security early however.

If you do collect social security before your full retirement age you are now bound by the annual earnings…

This caps how much income you can earn without paying hefty penalties on your social security income in retirement.

The limit is fairly low… so you really can’t be bringing home a sizeable amount of money without expecting large penalties.

But, people often ask:

What counts as Income for this calculation?⁉️

Let’s first address all of the income sources that do NOT count as income for penalizing your social security income:

✅ Your pension income won’t negatively affect social security

✅ Most annuity income also won’t cause a social security penalty

✅ IRA & Retirement distributions are also safe from penalties

✅ Dividends earned in non-qualified investment accounts

✅ Interest earned on CD’s & Guaranteed Rate Annuities

✅ Even Capital gains are exempt from being counted as income that could penalize social security

Now what DOES count as income⁉️

✅ Gross income earned as a W2 Employee

✅ The net earnings that you take home as a self-employed business owner

So really, it’s earned income through a job or business that will negatively affect your social security.

You still want to be cognizant of how you are collecting all of these income sources from a tax standpoint…

But you can rest assured that most income outside of your employer (or your business) won’t cause painful penalties for social security.

Let’s Chat 💬😎