Dear Rusty: I turned 70 on March 13, 2018 and I’m single. I was told to apply for Social Security one month before I turn 70, but now I’m hearing that I should have applied 4 months in advance. I have also been told not to apply for Social Security because I plan on still working. I think this is not right, but thought I’d ask anyway. I plan on working after 70 and I’m wondering what happens to the Medicare and Social Security deductions. Are they still deducted? Any other hints would be appreciated.
Signed: 70 but Still Kicking
Dear Still Kicking: I’m happy to be able to clarify these things for you. The Social Security Administration recommends that you apply for your benefits up to three months before you want them to start, but you won’t lose anything because you didn’t. Just be sure you specify in your application that you want your “Benefit Start Month” to be March 2018. They will make sure your benefits start for that month, even if they must pay you retroactively.
Working after your benefits start will not affect your Social Security payments in any way. Social Security’s annual “earnings limit” goes away once a person reaches their full retirement age, which in your case was age 66. So now at age 70, you can earn as much as you like and your benefits won’t be reduced as they might normally be for someone who had not yet reached their full retirement age.
But if you continue to work, even though you are on Medicare and collecting Social Security, FICA taxes (which include both Medicare and Social Security contributions) will continue to be withheld from your earnings. There is no exemption because you are already on Medicare or receiving Social Security benefits, nor because you’ve attained a certain age.
By claiming your benefits at age 70, your Social Security check will be 32 percent higher than it would have been at age 66. Please be aware also that depending on your income level, some of your Social Security benefits may be taxable income when you file your federal taxes.
As a single filer, if your “combined income”, also known as your Modified Adjusted Gross Income (MAGI), exceeds $25,000 then up to 50 percent of your benefits may be taxable; if your MAGI exceeds $34,000, then up to 85 percent of your benefits may be taxable.
To clarify, your “combined income” includes your regular Adjusted Gross Income for income tax purposes, plus 50 percent of your Social Security income, plus any non-taxable interest you received but did not need to claim on your IRS Form 1040. You should include this potential additional tax obligation in your thinking as you consider your income tax situation.
The information presented in this article is intended for general information purposes only. The opinions and interpretations expressed are the viewpoints of the Association of Mature American Citizens (AMAC) Foundation’s Social Security Advisory staff, trained and accredited under the National Social Security Advisors program of the National Social Security Association, LLC (NSSA). NSSA, the AMAC Foundation and the Foundation’s Social Security Advisors are not affiliated with or endorsed by the United States Government, the Social Security Administration or any other state government. Furthermore, the AMAC Foundation and its staff do not provide legal or accounting services. The foundation welcomes questions from readers regarding Social Security issues. To submit a request, contact the foundation at email@example.com.