How to Stay Under the Wire and Keep Your Benefits
The income limits that quietly reduce Social Security, ACA subsidies, and Medicare — and how to plan around them.
The Social Security earnings test (before full retirement age)
If you claim Social Security before your full retirement age (66–67) and keep working, earnings above an annual limit temporarily reduce your check. In 2025 that limit is about $23,400; above it, $1 is withheld for every $2 earned.
Important: this money isn't lost forever — your benefit is recalculated upward once you reach full retirement age. After full retirement age, there is no earnings limit at all.
How much of your Social Security gets taxed
Whether your benefits are taxed depends on 'combined income' (half your Social Security plus other income). Keeping withdrawals strategic can keep more of your benefit tax-free.
- ◆Draw from Roth accounts (tax-free) in years you want to stay under a threshold.
- ◆Consider Roth conversions in low-income years before age 73.
- ◆Coordinate withdrawals with your spouse to smooth taxable income.
ACA subsidy and Medicare (IRMAA) cliffs
If you retire before 65, ACA marketplace subsidies are based on your income — a little too much income can cost you thousands in premiums. After 65, high income two years prior raises your Medicare Part B/D premiums (called IRMAA).
The fix is the same: control which accounts you draw from each year so your taxable income lands where you want it.
Don't let 'under the wire' cost you more than it saves
Chasing a subsidy is only worth it if the savings beat the income you'd give up. Run the comparison, or ask a fee-only fiduciary advisor to model a couple of scenarios. The goal is keeping benefits AND building wealth — not one at the expense of the other.