GOBankingRates editorial team says their reviews are data-driven, not ad-driven. Unbiased, they claim. Trusted by millions, apparently. 🤷♂️
Let’s talk about the trap. You are 65. You want to work. You also want that monthly check from the government. Can you have both? Sure. But not without penalties.
People between 62 and 67 face a choice. Keep working or retire early. Quality of life matters. Mental stimulation helps. But money? Money dictates reality for many boomers sticking full-time in the game at 65. The tax ramifications are real.
The Benefit Tax
If you earn more than $24,480 in 2026 at age 65 the government takes back some of that money.
Brian Zink, founder of No Upfront Tax Relax, spells it out. One dollar withheld for every two dollars you make above the limit. That’s the rule.
Picture a guy making $60,000. He starts collecting Social Security. Maybe he gets $2,000 a month. Rough estimate. His earned income crushes the threshold by $35,520. Divide that by twelve months. It’s $2,960 over the limit every single month.
So they take half of that. $1,480.
That leaves him with $520 a month in benefits. Five hundred and twenty dollars. Not much help paying the electric bill.
What if he cut hours? Half-pay? Now he makes $30,000. His income only exceeds the threshold by $5,520. Per year. That’s just $460 extra a month.
They deduct $230.
He keeps almost $1,800. See the difference? Cutting hours actually leaves more money in your pocket when you combine it with benefits. Weird, right?
Provisional Income Complications
Wait, there is more. Your benefits might be taxed too. Depends on provisional income.
Calculate it this way. Take your Adjusted Gross Income. Add any tax-exempt interest. Add 50% of your yearly Social Security income. That number tells your fate.
- Single filers: Under $25,00 provisional? No taxes on benefits.
- Married: Under $32,000? You’re clear.
Fall between $25,000 and $34,000 (or $44,000 if married). Now you pay marginal tax on half your benefits. Go over those numbers. Boom. 85% of your Social Security is taxable.
The $60k guy pays on 85%. But wait, his benefits got slashed by the earnings test. So they tax a smaller amount. The part-time guy pays on only 50%. Better deal.
If the part-time person were married? No taxes at all on that income. Nice break.
Plan Ahead Or Regret It Later
Zink stresses planning. If you work at 65 and need that supplemental income do not guess. Look at the math.
Numbers change fast. Rules shift. One bad year can cost you thousands.
