Social Security Matters by Rusty Gloor, National Social Security Advisor at the AMAC Foundation, the non-profit arm of the Association of Mature American Citizens
Dear Rusty: I am 80 years old, and I receive monthly Social Security benefits, but I’m thinking about returning to work. At this age, am I limited in how much income I generate without affecting my benefit? If so, how much can I earn without affecting it? Signed: Spry Octogenarian.
Dear Spry Octogenarian: Since you have already reached your full retirement age (FRA) for Social Security’s purposes, you can earn as much income from working as you like without your monthly Social Security payment being affected. Social Security’s earnings test applies only to those who collect benefits before reaching their full retirement age, which is somewhere between age 66 and 67, depending on year of birth.
However, although the earnings test will not apply to you, it’s important to know that Social Security benefits are subject to income tax if your annual combined income from all sources (also known as your “Modified Adjusted Gross Income” or “MAGI”) exceeds certain thresholds. Your income tax filing status is an influencing factor – if you file as a single and your MAGI is more than $25,000, or if you file as “married/jointly” and your MAGI is more than $32,000, then 50% of the SS benefits you received during the tax year becomes part of your overall taxable income. And if your MAGI as a single filer is more than $34,000 or, as a married filer more than $44,000, then up to 85% of the SS benefits you receive during the tax year becomes part of your overall taxable income at your standard IRS income tax rate. Thus, returning to work may result in Social Security benefits unexpectedly becoming taxable income.
For complete clarity, your “MAGI” is your regular Adjusted Gross Income (AGI) on your income tax return, plus 50% of the Social Security benefits you received during the tax year, plus any other non-taxable income (except Roth IRA withdrawals) you may have had.
So, while your earnings from working at age 80 (and beyond) will not affect your monthly Social Security benefit payment, you may – depending on your total income or “MAGI” – find that your Social Security benefits will become taxable if your combined income from all sources exceeds the above thresholds. And if your benefits will become taxable, you may wish to consider having income taxes withheld from your monthly Social Security payments, which you can do by submitting IRS form W-4V to your local Social Security field office.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.
