Should You File for Social Security at 70 Even if You're Still Working?

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Though many workers today rush to retire in their early to-mid-60s, an estimated 25% think they'll keep plugging away well into their 70s. And that's a good thing for a number of reasons. First, the longer you work, the more opportunity you get to sock away money for retirement. Similarly, working a few years longer than the typical employee means not tapping your nest egg during that time, thus stretching the savings you've already amassed.

But a big motivator behind the decision to work into one's 70s has to do with Social Security. Specifically, for each year you hold off on filing for benefits past your full retirement age up until age 70, you'll get an 8% boost in payments that remains in effect for the rest of your life.

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But what happens if you're still working by the time you reach 70? Should you file for Social Security even if you don't necessarily need the income? The answer is: Absolutely.

Waiting past 70 doesn't make sense

The reason it always pays to file for Social Security at 70 if you haven't done so already is that the delayed retirement credits you collect for waiting stop accruing at that age. In other words, if your full retirement age is 67 and you wait until age 70 to take benefits, you'll boost them by 8% a year over that three-year period for a total increase of 24%. But once you turn 70, that incentive goes away, which means there's no sense in waiting any longer. If you fail to file for Social Security at 70, in fact, you'll risk giving up money that's rightfully yours.

Implications of working and collecting Social Security

You may have heard that your Social Security benefits will be reduced if you attempt to collect them while still bringing home a paycheck, but that only applies in scenarios where you're working and receiving benefits prior to reaching full retirement age. If you're 70, it means you're automatically past that point, and so whatever amount you're entitled to from Social Security, you'll get it in full.

That said, being on Social Security doesn't exempt you from paying into the system. You'll still lose a portion of each paycheck to Social Security and Medicare taxes even if you're receiving benefits yourself (though if you're a higher earner, you might pay Social Security taxes on just a portion of your income).

Furthermore, you should know that if you're still collecting a paycheck along with Social Security, those benefits might be taxed at the federal level. To see if this will apply to you, you'll need to figure your provisional income, which is your non-Social Security income plus 50% of your yearly benefits. If that total falls between $25,000 and $34,000 and you're a single tax filer, or between $32,000 and $44,000 as a joint filer, then you could be taxed on up to 50% of your benefits. And if that total exceeds $34,000 as a single filer or $44,000 as a couple filing jointly, then you could be taxed on up to 85% of your benefits.

Also, depending on where you live, you might pay state taxes on your Social Security income as well. Most states that tax benefits offer some type of exemption, but if your earnings are high because you're working and collecting a paycheck, you may not qualify.

Though working and collecting Social Security simultaneously does have some tax implications, once you turn 70, there's no reason not to claim the benefits that are rightfully yours. Yes, you may end up losing some of that money to taxes, but the same holds true for your regular paycheck. And financially speaking, it's better to get taxed on your income than have no income at all.

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