Issue link: https://www.ahpindiestylist.com/i/1316647
N ot a m e m b e r ? J o i n at a s so c iate d h a i rp rofe s sio n a ls .c o m 51 ello, beautiful! Are you ready to talk about aging gracefully? If so, get ready to dive into some dirty little secrets on easy ways to be smarter with your money and plan for retirement at the same time. Being in the salon industry for nearly 20 years, I am sad to say I have never experienced a retirement party for one of my peers. Have you? The thought of retirement can seem overwhelming, but it is never too early or too late to plan. Working in the salon industry as an independent stylist doesn't always have the perks of a corporate job. The biggest disadvantage we have is the lack of benefits, such as life insurance, health insurance, 401(k) savings, and stock options—plus we pay high taxes to boot. What if I told you there was a way you can have your cake and eat it too? Hold onto your seat, it's about to get juicy! TAXES AND SOCIAL SECURITY We are going to start this topic on a controversial note. Don't kill the messenger, but being honest on your taxes can actually be one of the best things you can do. Believe me, this idea was hard for me to swallow, but it's all about being educated and planning for the future. Let me give you an example. Many of us stylists were out of work because of the COVID pandemic. During that time, you may have qualified for the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Pandemic Unemployment Assistance (PUA) for independent contractors. For my family, the CARES Act was truly a blessing. Additionally, many of my colleagues were concerned about the minimal unemployment they received and were thankful for the extra $600 a week. Stylists who claimed their full income on their 2019 taxes received a higher unemployment benefit. As you can see, being honest on your taxes can give you a huge advantage when you need it most. How much do you really know about Social Security after retirement? Here's an important fact: Social Security benefits are determined by your past employment income. Specifically, your Social Security monthly benefits are calculated using income from your highest 35 working years. Are you thinking what I'm thinking? YES! The more honest you are on your taxes, the more money you will receive in your golden years. (I'll be honest: in my 20s, this thought never crossed my mind!) So, if you aren't claiming all your income, now is the best time to make a change. When can you start claiming Social Security, and what are your benefits? Currently, you can start claiming Social Security at the age of 62, although your benefit is reduced. According to the Internal Revenue Service: Let's say you turn 62 in 2020, your full retirement age is 66 and 8 months, and your monthly benefit starting at full retirement age is $1,000. If you start getting benefits at age 62, we'll reduce your monthly benefit 28.4 percent to $716 to account for the longer time you receive benefits. This decrease is usually permanent. On the other hand, if you choose to delay getting benefits until age 70, you will increase your monthly benefit to $1,266. This increase is the result of delayed retirement credits you earn for your decision to postpone receiving benefits past your full retirement age. The benefit at age 70 in this example is about 76 percent more than the benefit you would receive each month if you start getting benefits at age 62—a difference of $550 each month. 1 Seems like an easy choice, right? Perhaps you're thinking, I'll be fine—I have a spouse, parents, trust fund, etc. Think back to this year and how much changed in such a short amount of time. Wouldn't you like to be absolutely certain you are taken care of in retirement? Being honest on your taxes can give you a huge advantage when you need it most. Think back to this year and how much changed in such a short amount of time. Wouldn't you like to be absolutely certain you are taken care of in retirement?