At 73 and Still Working Full Time, Can You Avoid Social Security Taxes?
A 73-year-old still earning peak wages asks how to minimize taxes on Social Security benefits — a concern growing numbers of older workers share.
For older Americans who continue working well into their seventies, financial success can carry an ironic burden: the more you earn, the more likely your Social Security benefits become taxable. That is the dilemma facing one 73-year-old who describes earning more per week than at any previous point in their career — a situation that, while financially enviable, creates a more complicated tax picture than most retirees face.
Under current federal rules, Social Security benefits can become partially taxable once a recipient's "combined income" — a figure that includes adjusted gross income, nontaxable interest, and half of annual Social Security benefits — crosses certain thresholds. For single filers, up to 50% of benefits may be taxed above $25,000 in combined income, and up to 85% above $34,000. Those thresholds, set decades ago, have never been indexed to inflation, meaning more retirees are caught in the net each year simply because wages and investment returns have risen over time.
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For someone still drawing a full-time salary at 73, the challenge is compounded. Earned income alone may push combined income well above the 85% threshold, leaving little room to shield benefits through conventional means. Strategic tools that financial planners often recommend — such as Roth conversions in low-income years, careful timing of required minimum distributions, or reducing taxable investment income — become harder to deploy when a paycheck remains large and steady.
That said, options do exist. Contributing to a traditional 401(k) or similar employer-sponsored plan, if available, can reduce adjusted gross income dollar-for-dollar, potentially pulling combined income back below a higher tax bracket. Health savings account contributions, where eligible, offer a similar deduction. The practical upshot is that tax minimization at this income level is less about eliminating the liability and more about calibrating it — ensuring that withholding or quarterly estimated payments keep pace so that no surprise bill arrives in April.
The anxiety expressed — "I'd hate to end up with an unexpected tax bill" — reflects a real and underappreciated risk for high-earning older workers who may not realize how their continued productivity interacts with entitlement taxation. Proactive planning with a tax professional familiar with Social Security rules is the most reliable safeguard. Continue reading at MarketWatch.com
