Watch out for the self-employment tax.

The more you work the more your social security payments are effectively taxed. Nothing new here -- because those of us who still get a paycheck of some sort are aware that our social security is effectively reduced with new earnings. 

However here is a cautionary tip. 

Watch out for the self-employment tax. It will grab you at the end of the  year and does not ever let go. No matter your age and no matter that you are already collecting social security if you work and a make a few hundred dollars or so, you must pay self-employment tax on your net income. And this tax does not adjust your social security check. These payments go to pay someone else who has not started collecting social security yet, so say the IRS. As seniors and receiving social security from previous employment taxes, we are still taxed if we employ ourselves- the self employment tax. It is a penalty for working. 

Most seniors can use a few extra dollars for luxury vacations  or other retirement purchases. Part time consulting work is normal and healthy. However, the self employment tax will take another 14.3% bite of your money. So be aware and be prepared and always keep track of your expenses. I researched my last book with a 5 week trip to Australia. If you have found a way to avoid this tax, please let me know so I can share it with others.