# Will withdrawals from my retirement fund affect my Social Security benefits? – The Motley Fool

Social Security is a program created by the government designed to provide a source of continuous income to retirees, but what most people do not know is that if they earn more than a certain amount, the government will recover part of that money. of a tax on benefits. This means that retirees should be strategic about how much they retire from their retirement accounts so that it does not cost money accidentally. Next, I will explain how your retirement fund withdrawals could affect your Social Security benefits and what you can do about it.

If your "combined income" (a figure from the Social Security Administration that I will explain later) is above a certain threshold, then up to 85% of your Social Security benefits could be taxed as income. The combined income threshold varies according to marital status. Beneficiaries with a combined income of more than \$ 25,000 and married couples who file a joint return with a combined income of more than \$ 32,000 may be subject to taxes of up to 50% of their benefits. People with a combined income of more than \$ 34,000 and couples with a combined income of more than \$ 44,000 could pay taxes on up to 85% of their benefits.

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Once you have this information, simply add the numbers to calculate your combined income. So, if you withdraw \$ 25,000 from your traditional retirement accounts, have \$ 2,000 in non-taxable interest and get \$ 12,000 per year from Social Security, your combined income would be \$ 33,000:

\$ 25,000 + \$ 2,000 + 1/2 (\$ 12,000) = \$ 33,000

Remember that if your combined income exceeds one of the above tax thresholds, that does not mean that you will be taxed on the total amount. There is a special formula that determines the amount of taxes you will actually pay for your benefits. This can be tricky to solve on your own, but fortunately there are Social Security tax calculators that can do the work for you.

## How to avoid being taxed on your Social Security benefits

The simplest way to avoid taxes on Social Security benefits is to consider how much you are withdrawing from your retirement accounts each year. If you are near one of the tax thresholds, you could try to withdraw a little less than you planned to avoid the tax. But if you regularly find yourself bumping the limit, you may have to make some adjustments.

Generally, it is better to delay the distributions of your Roth IRA account as long as possible so you can continue growing tax-free, but there are times when you may want to take advantage of it before. If you are close to the Social Security tax thresholds mentioned above, consider getting more money from Roth accounts and less from traditional accounts. This could reduce your combined income enough to avoid taxes on Social Security benefits and, at the same time, provide enough income to cover your living expenses. And if you have not yet retired, consider investing through a Roth-type account, or even transfer some existing savings from a traditional account to a Roth account, to help you manage your taxes during retirement.

Even if you can not avoid paying taxes on some of your Social Security benefits, it's still worth understanding how this works. You may be able to reduce your tax burden and, at a minimum, you will not get an unpleasant surprise when the time comes for taxes.