It’s still ‘I Kicked My Full-Time Gig To The Curb and Am Now Retired Month!’ (Yes, we already told you we made that up.) As promised, we have more retirement tips for those retiring and applying for their Social Security Retirement Benefits in 2019. Last week, we shared tips geared towards those who are those who have reached their full retirement age or otherwise over the age of 66. This week, we are sharing tips for those who are self-employed or independent contractors, and plan to start receiving their Social Security Retirement in 2019.
Tip Number One: The biggest mistake self-employed/independent contractors make, is that they focus on reducing their tax liability, but fail to think about Social Security like an insurance policy—One That requires regular contributions. At this point, I have probably mentioned this ad nauseum. Social Security is akin to an insurance policy. You are entitled, as long as you keep up with those premiums and meet the other requirements set by the policy holder. So, if you have a whole bunch of expenses, and you are claiming zero dollars in income, breaking even at the end of every year, you may not be current on your premiums. This tactic may work as far as your tax liabilities are concerned, but it could completely screw up your Social Security entitlement. Worse yet, if you become disabled…you’re probably screwed. If you’ve been self-employed/independent contractor, for longer than 10 years, and you’ve been claiming zero dollars, each year, because you have so many expenses, you’ve technically not paid your insurance premium. You are not insured. You can’t collect. Your family can’t collect. Catch my drift?
Tip number two: If you are a self-employed person, or independent contractor, you should consider taking a salary, or make sure you are claiming a profit and paying taxes on the minimum amount required to earn four credits. It’s a very low amount. In 2019, If you earn $1360, you would earn one credit. If you earn $5,440, you could earn the maximum of four credits. So, it’s totally doable for anyone with a profitable business. If you think this source of income will matter to you during your retirement years, or if you become disabled, do something about it now.
Navigating through your Social Security Retirement options can be overwhelming, confusing, and even scary. But you are not alone. We got you covered! Check us out next week for more tips to help you Maximize Your Retirement.