If you are a business owner who wants to continue working but also intends to soon file for Social Security benefits, you may have the option to reduce your earned income, which in turn may increase your unearned income and the Social Security benefits you receive. Some strategies to consider:

• Work less and draw a smaller salary from the business. You may choose to take advantage of non-taxable "perks" as much as possible.
• Use tax-favored retirement plans. Have your business set up a pension plan that defines the benefits, or an age-based profit-sharing plan that contributes the maximum amount permitted on your behalf.
• Establish a non-qualified deferred compensation plan in addition to your existing retirement plan. In this situation, current earnings can then be paid to you in future years.

As a word of caution, keep in mind this Social Security Administration (SSA) word of warning: Your earnings must match the work you do. The SSA closely scrutinizes working business owners who start to receive Social Security benefits while reporting substantially reduced earned income.

Source: Jim Ellis, Ellis & Associates, CPAs, P.A.