This week, I’m explaining social security retirement benefits and a few of the more important considerations you’ll want to keep in mind as you decide when to begin collecting your checks.

Today, I’m talking about how to avoid the social security taxation trap. 

A common question many people ask is: Is social security taxed? 

I hate to break it to you, but yes it is...and it gets taxed at a fairly low income threshold as well. 

Up to 85 percent of your benefits become taxable if your income is more than $34,000 (individual) or $44,000 (couple). 

On top of that, several states also tax your social security benefits! 

Considering you paid into social security your entire working life, it seems more than a little unfair that you also pay taxes on your social security checks in retirement too. 

So it’s important to consider how social security will be taxed in your situation, so you don’t overestimate your NET income from social security in retirement. If you don’t consider the taxes, and plan on more income then you’ll actually end up having, it could be a big oops surprise in retirement and may force you to cut your spending in retirement to make up the difference. 

So when you’re figuring out how much after-tax income you’ll need to live comfortably in retirement, you’ll want to consider how all of your income sources will be taxed, and remember that social security is taxed as well when your income exceeds certain thresholds. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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