Hello, beautiful! Are you ready to talk about aging gracefully? If so, get ready to dive into some dorty 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 if 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 as a way you can have your cake and wat it too? Hold on to your seat, it's about to get juicy!
Taxes and Social Security
We are going to start this topic n 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 nighest 35 working years. Are you thinking what I'm thinking? YES! the more honest you are on your taxes, the more money you will received 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 $761 to account for the longer time you receive benefits.
by Tanya Owens
This article appears in Volume 1 Issue 4 of AHP Indie Stylist magazine
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AHP Indie Stylist is AHP's bimonthly publication, created to speak directly to you, the independent hair stylist and barber.
In this issue:
• The Art of Change: Lucie Doughty chats about inspiration, industry evolution and tips for career growth
• Cutting Curtain Bangs: The layered curtain fringe is simple, customizable, and super popular
• Surviving the holiday rush: Stress less and be blessed