When it comes to payments from the Social Security Administration, we must always be careful. No retirement beneficiary wants to get in trouble for receiving money. Therefore, if you have a benefit and work at the same time, you should know that you should declare that money. On the other hand, you should also pay attention to whether or not withdrawing money from an IRA can affect your Social Security benefit payment.
As we have already mentioned, working and collecting Social Security retirement benefits at the same time is possible. The only problem is that your benefit will be less depending on the amount of money you make working. We must always control this range of economic possibilities. In the event that you collect more money than estimated, your benefit will be reduced by $1 for every extra $2. But with an IRA, things are different.
Are an IRA and Social Security compatible?
The short answer is yes, they are compatible. If you want to withdraw money from an IRA and you are collecting Social Security, you will have no problem doing this. The reason is very simple: the Administration does not consider it income. This income must be earned through work or self-employment. Since it does not fall into either of these categories, earnings through an IRA are compatible with the retirement benefit.
Thus, you can achieve greater purchasing power by combining the Social Security retirement benefit payment and the IRA withdrawal. Don’t worry about going over the limit, so you can have this income without any problems.
Consult a specialist
In any case, each case of Social Security beneficiary is totally unique. It may also depend on your retirement age. It is not the same to retire at 62 than at 67. In the first case we are talking about Early Age Retirement (EAR) and in the second case Full Age Retirement (FRA). It should not affect combining this with the IRA, but it is always better to consult a specialist.
In conclusion, NJ.com states that the earning limits exist for everything related to money earned through work and self-employment. As far as investments and pension plans are concerned, these limits do not affect them, so you can combine your IRA withdrawals with Social Security without fear of losing money.