Working retirees may face Social Security benefit reductions

Many retirees choose to return to work for various reasons. Some need extra income to cover living costs, especially with rising inflation. Others feel lonely and seek social interaction through work. While there are benefits to working during retirement, there are also two important Social Security issues to consider. First, you could face taxes on your Social Security benefits. Not everyone pays taxes on these benefits. If Social Security is your only income source, you might not need to worry about taxes. However, if your combined income exceeds $25,000 for single filers or $32,000 for joint filers, you could owe taxes. For example, if you earn $1,000 a month from a job, your combined income might reach levels that trigger taxes on your benefits. Second, some of your benefits might be withheld if you earn too much while working before reaching full retirement age. In 2025, if you earn over $23,400, you'll lose $1 in benefits for every $2 you make beyond that amount. If you're close to reaching full retirement age, that limit increases to $62,160, where you'll lose $1 for every $3 earned over that amount. While you won’t permanently lose these funds, it’s crucial to be aware of how your earnings can affect your benefits. Overall, working during retirement can be positive, but it’s essential to understand how it might impact your Social Security benefits to avoid surprises.