Nicholas Scheibner, CFP®, is quoted on this topic, answering a reader’s question on NJMoneyHelp.com by Karin Price Mueller, “I’m 75 and working. Can I still save in an IRA or 401(k)?”, originally published on July 13, 2021.
A 30-second read by Nicholas Scheibner, CFP®: More people are finding new ways to stay productive after they retire from their traditional career. Under the SECURE Act, you can now continue to make contributions to a 401(k) or IRA if you have earned income, with no age limitations. This counts for spousal IRA contributions, as well. Read our Feb. 2020 post to learn how the SECURE Act changed the rules for workers over age 70 ½.
Your Social Security benefit payments are based on your highest income-producing 35 years of work. The computation from Social Security is based on your “Average Indexed Monthly Earnings”. Social Security uses these years in a formula to produce your Primary Insurance Amount. This is the amount you would receive if you collected Social Security at Full Retirement Age and is the basis for many other Social Security programs.
For 2022 the Primary Insurance Formula is the sum of:
(a) 90 percent of the first $1,024 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $1,024 and through $6,172, plus
(c) 15 percent of his/her average indexed monthly earnings over $6,172.
Your Social Security may increase if this new job replaces a lower income year.
You can view your Social Security statement at www.ssa.gov and see your earning history on file.
If you have any further questions, please reach out to your Baron Team.
Disclosure: This is a general communication being provided for informational purposes only. This material is not intended to be relied upon as a forecast, research, tax or investment advice. Please consult your tax planning professional for personal tax advice. Past performance is no guarantee of future results. Every investment strategy has the potential for profit or loss. Source: https://www.ssa.gov/oact/cola/piaformula.html