Social Security is the cornerstone of many seniors’ retirement plans. In the most recent edition of an annual poll from Gallup, 60% of retirees said their monthly check is a major source of income for them. Another 28% said it played at least a minor role in their budgets.
As such, it’s important to make sure you’re getting the most from the program. Unfortunately, there are several pitfalls that can slash your benefits. Just a few small details in the Social Security rules can cost you hundreds or even thousands of dollars. It’s important to know the specifics so you can either avoid those situations or at least know what you’re dealing with.
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Here are three overlooked triggers that can slash your Social Security checks.
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1. Working while collecting benefits before reaching full retirement age
If you plan to keep working or return to work while collecting Social Security, you may find your monthly check isn’t as big as you thought. If you haven’t reached full retirement age (between 66 and 67, depending on when you were born), your benefits are subject to the retirement earnings test.
If your wages from work exceed a certain threshold, the Social Security Administration (SSA) will start withholding some of your benefits. In years before you reach your full retirement age, the threshold is fairly low, and the SSA will reduce your annual Social Security benefit by $1 for every $2 you earn above it.
There’s a higher threshold in the year you reach full retirement age: The reduction is only $1 for every $3 above the limit. For 2025, the earnings test kicks in at $23,400 (or $62,160 for the higher limit). The SSA adjusts those thresholds for inflation each year.
It’s important to note that the amount withheld from your Social Security checks due to the earnings test isn’t lost for good. The SSA will adjust your benefit once you reach full retirement age to make up for the amount withheld. For each month’s worth of benefits taken by the earnings test, your benefit will be recalculated to the amount it would’ve been if you had delayed your claiming decision by one month.
If you were planning to supplement an early Social Security claim with work, be sure you know how the earnings test will affect your overall benefit.
2. Getting remarried if you’re receiving spousal or survivor benefits
If you’re collecting spousal benefits from an ex, getting remarried could result in a smaller benefit.
Divorced spouses are allowed to collect benefits based on a former partner’s earnings record as long as they were married at least 10 years.
Unlike spousal benefits for married partners, you can collect those benefits even if your ex hasn’t started collecting benefits, as long as you’ve been divorced at least two years. If it hasn’t been that long, you’ll need to wait until they start collecting or you meet the two-year requirement.
Your decision to claim benefits based on your ex’s earnings record won’t affect the benefits of your former partner, who won’t have any knowledge that you claimed benefits this way.
However, if you remarry, you’re no longer eligible for those spousal benefits based on your ex’s earnings. You’ll only qualify for spousal benefits based on your current partner’s earnings, who must be collecting benefits in order for you to qualify. Your benefits could revert to your personal retirement benefit if it’s more than the spousal benefit.
Note that if you qualify for survivor benefits, those won’t be affected as long as you remarry after 60.
Marriage shouldn’t be a financial decision, but it’s important to understand how your finances could be affected.
3. Increasing your retirement income or moving to a new state
While taxes won’t directly affect the check you receive each month from the SSA, they can have a significant impact on how much of your benefits you keep. There are two triggers that could result in a higher tax bill on your benefits.
First, you could end up with higher retirement income, which would push more of your Social Security benefits into taxable territory. Social Security taxation is based on a metric called combined income, which is the sum of half your benefits, your adjusted gross income, and any untaxed interest income. If that number exceeds a certain threshold, a portion of your Social Security benefits becomes taxable. The table below provides some guidelines.
| Taxable Benefits | Combined Income (Single) | Combined Income (Joint) |
|---|---|---|
| 0% | Less than $25,000 | Less than $32,000 |
| Up to 50% | $25,000 to $34,000 | $32,000 to $44,000 |
| Up to 85% | More than $34,000 | More than $44,000 |
Data source: IRS.
You might increase your income through retirement account withdrawals due to required minimum distributions. A simple Roth conversion could push a significant portion of your benefits into taxable territory.
Another trigger that could make more of your Social Security check taxable is moving to a new state. Most states don’t tax Social Security income, but nine states still impose some level of taxation. Moving to a new state in retirement shouldn’t be entirely a financial decision, but make sure you know the rules before you move so you’re not surprised come tax time.
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