The Facts about Part-Time Income in Retirement, Ep #83

Should you consider a part-time job when you retire? What about utilizing passive income streams? How does a passive or part-time income in retirement impact your social security benefits? I share some facts about social security benefits in retirement—and how they might be impacted by an income—in this episode of Retirement Made Easy. Don’t miss this one!

You will want to hear this episode if you are interested in…

• [5:57] My thoughts on becoming an Uber driver
• [7:20] Start with a retirement budget
• [9:43] The social security income rule
• [11:11] Are you interested in rental properties?
• [14:07] Turn what you enjoy into an income opportunity

Start with a retirement budget

What are your fixed expenses (utilities, health insurance, etc.)? How much do you want to spend in retirement on discretionary expenses (golf, travel, eating out)? Let’s say your fixed and discretionary expenses total $5,000 a month. Let’s also hypothesize that your home is paid off and you’re debt-free. Your net joint social security income is $2,000 per month. That means $3,000 of retirement income needs to come from a retirement portfolio.

But what if you aren’t ready to draw from your retirement income? What if you’d rather work a part-time job while you still can? Or do you feel you need to work? You need to make sure that the income that you make won’t reduce or impact your social security income.

The social security income rule

If you’re receiving social security income prior to your full retirement age, there’s an earnings limit that you can make which is $19,560 as of 2022. What does this mean? If you’re 62-years-old, working, and collecting social security, you can earn up to $19,560 and it will not impact your social security benefit. If you’re collecting social security and you’ve hit full retirement age, there is no earnings limit. You can make as much earned income as you want. Make sure you’re familiar with this rule.

Does rental income impact your social security benefits?

The earnings rule does NOT apply to passive income, such as rental properties. So should you get into the rental property space? I’ve had many clients that have seen great success with this—and many others who’ve dealt with complete disasters. I’ve heard some horror stories, especially with the rental forgiveness because of COVID. It all depends on your tenants. They need to pay on time and be respectful of your properties.

If you’re going to have a rental property, you need a plan. Will you have a management company take care of the day-to-day? What are their costs? There are many factors to consider about rental properties before diving in.

Turn what you enjoy into an income opportunity

Is there something you enjoy doing that you could draw an income from? I have a client that enjoys mowing grass, so he mows grass for some of his neighbors and makes around $500 a month doing so. I have another client that loves to golf, so he got a part-time job working the pro shop at a country club. He gets to golf for free the entire year.

I have yet another client that loves cleaning. She goes into bank foreclosures and properly cleans them for resale. Contractually, she’s allowed to keep anything she wants from the home(s). There are some things she’s able to keep and resell in a pawn shop or put up for auction.

The moral of the story? If you want to take on a part-time job in retirement, don’t jump at the first opportunity that comes your way. Take the time to find something that you enjoy.