Why Your Social Security Benefit Will Surely Disappoint You | personal finances

Why Your Social Security Benefit Will Surely Disappoint You |  personal finances

A growing number of retirees lose benefits to federal taxes each year because wage growth leads to higher incomes over time, but the threshold when benefits become taxable doesn’t change. Seeing some of your hard-earned retirement benefits going to the government can be a huge disappointment, since you paid taxes on earnings all your life to become entitled to those benefits. State taxes are only an issue if you live in one of the 13 states that assess them. But federal taxes are taken out of benefits as soon as your provisional income exceeds $25,000 as a single tax filer or $32,000 as a married joint filer. Provisional income is taxable income plus half of Social Security checks and some nontaxable income.

There’s one last unpleasant surprise you could face upon claiming your Social Security benefits: You may find you lose some of the money to federal and state taxes.

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