13 Jul I’m 75 and working. Can I still save in an IRA or 401(k)?

Q. I am over 75 and took a job to keep myself busy. Can I still contribute to an IRA for me and my wife? Also can I contribute to my 401(k) to get my employer’s matching contributions? I learned that I will continue to pay Social Security and Medicare taxes but my Social Security income will not increase even though I pay Social security tax.
— Still working

A. Glad you are keeping busy.

Many people are finding new ways to stay productive after they retire from their traditional career.

You do have new opportunities to save, said Nicholas Scheibner, a certified financial planner with Baron Financial Group in Fair Lawn.

“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,” he said. “This counts for spousal IRA contributions, as well.”

It’s a great move to take advantage of your employer’s matching funds.

Now to your Social Security.

Your Social Security benefit payments are based on your highest income-producing 35 years of work, Scheibner said.

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, he said.

“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,” he said.

For 2021, the Primary Insurance Formula is the sum of 90% of the first $996 of your average indexed monthly earnings, plus 32% of your average indexed monthly earnings over $996 and up to $6,002, plus 15% percent your average indexed monthly earnings over $6,002.

That means your Social Security may increase if this new job replaces a lower income year, Scheibner said.

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This story was originally published on July 13, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.