The Surprising Way Working After Your Full Retirement Age (FRA) Could Cost You Social Security Benefits
Key Points
Working and claiming Social Security could cause you to owe more Social Security benefit taxes.
A lot depends on your provisional income -- which incorporates several factors.
Plan for these taxes in advance so that you aren't caught off guard by your tax bill.
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Once you've reached your full retirement age (FRA) -- 67 for most workers today -- you no longer have to worry about Social Security benefit reductions for early claiming. But if you're still working, your salary and benefits could put you at risk of owing taxes on up to 85% of your checks. Working and claiming Social Security at the same time could still make sense for you, but it's important to understand the financial implications before you commit to it.
You might be able to avoid benefit taxes with careful planning, though even if you can't, it's still worth knowing how they work. Preparing for these taxes in advance can help you avoid sticker shock when you file your return.
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How Social Security benefit taxes work
The Social Security Administration considers your provisional income -- adjusted gross income (AGI), plus any nontaxable interest from municipal bonds, and half your annual Social Security benefit -- when deciding whether you owe taxes on your benefits. The following table breaks down what percentage of your checks you could pay ordinary income taxes on, depending on your marital status:
|
Marital Status |
0% of Benefits Taxable If Provisional Income Is Under: |
Up to 50% of Benefits Taxable If Provisional Income Is Between: |
Up to 85% of Benefits Taxable If Provisional Income Exceeds: |
|---|---|---|---|
|
Single |
$25,000 |
$25,000 and $34,000 |
$34,000 |
|
Married |
$32,000 |
$32,000 and $44,000 |
$44,000 |
Data source: Social Security Administration.
These thresholds aren't indexed for inflation, so it's possible you may run into them in 2026 or beyond, even if you've never owed them before. Having a job makes this even more likely because your salary will raise your provisional income.
How to prepare for Social Security benefit taxes
Sometimes, it's possible to reduce or even avoid Social Security benefit taxes by managing the other aspects of your provisional income. For example, you might reduce spending from your retirement accounts or drop to part-time work to reduce your salary. But this leaves you with less money for your living expenses today, so it might not be feasible for everyone.
When you cannot avoid benefit taxes, your next-best move is to prepare for them. Work with an accountant if necessary to figure out how much you're likely to owe in benefit taxes for the year. Then decide whether you need to set aside money for these taxes. If you normally get a large tax refund, this might not be necessary. Repeat this process each year to account for changes to your Social Security benefits and income.
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