Phoenix, Arizona – Many American taxpayers reach the full retirement age of 67 and choose to start drawing Social Security benefits while continuing to work. This decision often results in paying taxes on a portion of the benefits received, but for some, it is a calculated move to maintain financial stability while enjoying the benefits of retirement.
For one individual who retired from a full-time job in 2021, the decision to draw Social Security benefits while continuing to work as an independent contractor was a strategic choice to strike a balance between retirement enjoyment and financial security. Despite the threshold for paying federal income taxes on Social Security, this individual found value in maintaining an active work life while supplementing retirement income with Social Security benefits.
When contemplating the decision to start drawing Social Security benefits, individuals often consider various factors, including the replacement rate of working pay by Social Security and average lifespan statistics. Additionally, the impact of taxes on benefits based on combined income, pay, and investment income is crucial in the decision-making process.
While some individuals may be able to live on benefits and other income totaling less than the taxable threshold, for many, continuing to work and paying taxes on Social Security benefits leads to enhanced financial stability in retirement. Despite the nuances of navigating Social Security benefits and taxes, some individuals find value in sharing retirement revenue with the IRS as part of their long-term financial plan.
For many retirees, the ability to continue working part-time or pursuing volunteer work while receiving Social Security benefits and potentially paying taxes on them is a fulfilling way to stay active in their communities. The sense of purpose and connection derived from continuing to work and contribute to meaningful causes often outweighs the frustration of paying taxes on retirement income.
Ultimately, the decision to draw Social Security benefits while continuing to work is a personal one, but for many individuals, the ability to maintain a balance between work, retirement, and giving back to their communities is a fulfilling approach to retirement. With Social Security and in some cases, additional retirement income sources guaranteed for life, the trade-off of paying some taxes along the way is considered a reasonable compromise for the long-term benefits of financial stability and community engagement.