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More than half of Americans surveyed by Voya Financial plan to work in retirement. If you share that plan, you may assume that you can easily combine paid employment with other sources of retirement income, such as your retirement savings and Social Security.
However, if you claim Social Security before your full retirement age which is based on your year of birth your benefits may be reduced through a mechanism known as the Social Security earnings test. Essentially, this rule limits your benefits if your paid employment earnings exceed certain thresholds.
The good news is that once you reach full retirement age, the benefit amounts that were withheld due to the earnings test will be returned to you in future Social Security payments. However, that doesn’t help when you are trying to balance your budget during the early years of retirement.