The traditional concept of retirement: a sudden full-stop after decades of labor: is rapidly becoming a relic of the past, especially here in the Texas Hill Country. For many, the transition from the boardroom or the clinic to a quiet porch in Boerne isn’t about stopping; it’s about shifting gears. This is the era of the Encore Career.
Whether it’s a retired executive opening a boutique winery near Fredericksburg, a teacher starting a consulting business, or a craftsman selling bespoke furniture in Wimberley, Texas retirees are finding that work in retirement provides more than just a paycheck. It offers purpose, social connection, and a way to fund a more luxurious lifestyle.
However, entering an encore career requires more than just a business plan; it requires a sophisticated understanding of how that new income interacts with your Social Security benefits and your tax-deferred retirement accounts. At Mau Sanchez Capital, we often help clients navigate this delicate balance to ensure their hard-earned success doesn't inadvertently trigger benefit reductions or unnecessary tax bites.
The 2026 Social Security Earnings Test: Know Your Limits
The most common concern for retirees considering a part-time venture is the impact on their Social Security checks. If you have already reached your Full Retirement Age (FRA), the news is simple: you can earn as much as you want without any reduction in your Social Security benefits.
However, if you are under your FRA and have already begun taking benefits, the Social Security Administration (SSA) applies an "earnings test." For the year 2026, the stakes are as follows:
- If you are under FRA for the entire year: You can earn up to $24,480 ($2,040 per month) before benefits are impacted. For every $2 you earn above this limit, the SSA will withhold $1 in benefits.
- In the year you reach FRA: The limit is significantly higher. You can earn up to $65,160 in the months leading up to your birthday. For every $3 you earn above that limit, $1 is withheld.
It is important to remember that these withheld benefits aren't "lost" forever. Once you reach your FRA, the SSA recalculates your monthly benefit amount to account for the months they withheld payments, effectively giving you a raise later in life. Still, for those relying on that monthly cash flow to fund their Hill Country lifestyle, understanding the current 2026 COLA landscape and earnings limits is vital.
Maximizing Your "Encore" Income: Solo 401(k)s and SEP IRAs
One of the most powerful strategies for an encore career is using self-employment income to further fortify your retirement nest egg. If your new venture is successful, you may find yourself with "excess" income that you’d rather keep growing tax-deferred than lose to the IRS.
At Mau Sanchez Capital, we specialize in helping business owners and self-employed professionals select the right vehicles for wealth preservation. Two of the most effective tools for the encore entrepreneur are the Solo 401(k) and the SEP IRA.
The Solo 401(k)
For a "solopreneur" (a business owner with no employees other than a spouse), the Solo 401(k) is often the gold standard. It allows you to contribute both as the "employee" and the "employer."
- The Advantage: It typically allows for higher total contribution limits at lower income levels compared to other plans.
- The Strategy: By contributing a significant portion of your encore earnings into a Solo 401(k), you reduce your taxable income, which can be particularly beneficial if you are trying to stay below certain tax brackets or Medicare premium surcharge thresholds.
The SEP IRA
The Simplified Employee Pension (SEP) IRA is a favorite for its ease of setup and flexibility. You can contribute up to 25% of your net self-employment earnings (up to a cap that adjusts annually for inflation).
- The Advantage: There is very little administrative oversight required, making it ideal for the retiree who wants to focus on their passion, not paperwork.
- The Strategy: SEPs allow you to vary your contributions year-to-year. If your Hill Country art gallery has a blockbuster summer but a quiet winter, you can adjust your savings accordingly.
"Retirement is not the end of the road, but a change of scenery. The goal is to ensure the financial road ahead remains as smooth as the rolling hills of Texas." : Mau Sanchez
Turning Passions Into Paychecks: Real Examples from the Hill Country
What does an encore career actually look like? It rarely involves a 9-to-5 grind. Instead, it’s about leveraging decades of expertise in a way that fits a slower-paced, wellness-focused living style.
- The Professional Consultant: A retired HR director from Austin moves to Wimberley and begins offering fractional consulting to local non-profits. By working just 10 hours a week, she stays under the Social Security earnings limit while maintaining her professional identity.
- The Historic Renovator: Taking advantage of the unique architecture in towns like Fredericksburg or Boerne, a retired engineer begins flipping or managing historic short-term rentals. This provides significant "active" income that can be channeled into a SEP IRA.
- The Agritourism Entrepreneur: A couple buys a few acres near Dripping Springs to start a small lavender farm or hobby vineyard. While the physical work keeps them active, the business structure allows them to deduct significant expenses related to the land and equipment.
Why the Hill Country is the Epicenter of the Encore Career
Texas, and specifically the Hill Country, offers a unique environment for the encore career. Beyond the aesthetic beauty and the world-class wineries, the economic environment is exceptionally friendly to retirees.
- No State Income Tax: Your encore earnings are not subject to state income tax, allowing you to keep more of what you earn compared to retirees in other states.
- Strong Community Networks: Organizations like the local Chambers of Commerce in Kerrville or New Braunfels are filled with retirees who are eager to mentor, network, and support new local businesses.
- The "Experience Economy": Tourists flock to the Hill Country for authenticity. Retirees who bring decades of high-level experience to local shops, galleries, and services are often the most successful.
Planning Your Encore with Mau Sanchez Capital
Success in an encore career is measured by more than just your bottom line; it’s measured by how well that income serves your overall financial plan. At Mau Sanchez Capital, we believe in a fiduciary approach that looks at the whole picture. We focus on:
- Proper Asset Allocation: Ensuring your encore income doesn't lead to an "unbalanced" life, where you are taking too much risk in your business while ignoring the liquidity and transparency of the public markets.
- Risk Management: Constructing portfolios that provide a stable foundation, so your encore career can be a choice, not a necessity.
- Liquidity and Transparency: We favor investment strategies that avoid excessive fees and lockups, giving you the flexibility to pivot your business or your lifestyle whenever you choose.
If you are ready to turn your passion into a paycheck without jeopardizing your benefits, it’s time for a conversation.
Schedule a private meeting with a fiduciary financial advisor today by calling (512) 593-8380 or by visiting: https://calendly.com/portafoliocapital/15min
Portafolio Capital Management dba Mau Sanchez Capital is a Registered Investment Adviser. This content is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Advisory services are provided only pursuant to a written advisory agreement.
For more information about our services and our commitment to fiduciary excellence, visit us at https://portafoliocapital.com/ or call us at (512) 593-8380.
This article may include stories, scenarios, and perspectives created or assisted by artificial intelligence. Although the individuals and circumstances described may be fictional, the topics are intended to reflect real financial, personal, and lifestyle issues that retirees and individuals commonly face. The content is provided to encourage readers to consider different perspectives that may affect their retirement, regardless of whether they are currently planning, approaching retirement, or already retired. It is intended for general educational and informational purposes only and should not be interpreted as personalized investment, financial, tax, legal, medical, or retirement-planning advice. Individual circumstances vary. Readers should independently verify any information presented and consult appropriately qualified professionals before making financial or personal decisions. No advisory, professional, or client relationship is created through the use of this website.
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