The Average Social Security Check Is $2,088, but You May Not Get to Keep It All

Many older Americans today are living on just Social Security. And while that's a difficult thing, with very careful planning and minimal spending, it may be doable.

The average monthly Social Security retirement benefit today is about $2,088, which amounts to roughly $25,000 on an annual basis. With a paid-off mortgage and car and very low expenses, you may be able to cover your costs on just your benefits, but you shouldn't count on it, especially since you may not get to keep your entire Social Security check.

There are several reasons why your Social Security benefits may not be yours to keep in full, and it's important to know which factors could apply to you.

If you work while collecting benefits, some of that money may be withheld

The Social Security Administration (SSA) allows beneficiaries to work while receiving their monthly checks. Once you reach full retirement age (FRA), you could earn any amount of money from a job without having Social Security withheld.

But if you work before reaching FRA, you'll be subject to Social Security's earnings test. And making too much money could mean losing some of your Social Security temporarily or even your check entirely.

In 2026, you'll have $1 in Social Security withheld per $2 of earnings above $24,480 if you do not reach FRA by the end of the year. If you reach FRA by the end of 2026, you'll have $1 in Social Security withheld per $3 of earnings above $65,160.

Withheld benefits for exceeding the earnings test are not forfeited completely. At FRA, the SSA recalculates your benefits and returns that withheld money to you in the form of larger checks. But in the near term, you may not get all of the Social Security you expect to receive.

If your income is too high, you could owe taxes on your Social Security checks

The way most people earn Social Security is by paying taxes on wages. For this reason, you'd think your benefits would be yours to collect in retirement without owing tax. But once your provisional income reaches a certain threshold, a portion of your Social Security checks could be taxed.

Provisional income is calculated as the total of your adjusted gross income, tax-exempt interest income, and 50% of your annual Social Security benefit. If the total reaches $25,000 to $34,000 and you're single or $32,000 to $44,000 and you're married filing taxes jointly, up to 50% of your Social Security benefits could be taxed at the federal level. Beyond these thresholds, up to 85% of your benefits could be taxed.

Clearly, these are not very high thresholds. The reason is that they were established decades ago and have not been adjusted for inflation. That's intentional, because taxes on benefits help fund Social Security, and the program definitely needs money.

If you're on Medicare, you'll have Part B premiums deducted

Seniors who are enrolled in both Medicare and Social Security have to pay for Part B, which covers outpatient care and diagnostic services, out of their monthly benefits. This means that once you enroll in Medicare, you should not expect to keep your Social Security checks in their entirety.

Medicare's standard monthly Part B premium cost could change from year to year. Currently, it's $202.90, and higher earners who are subject to surcharges pay more.

You could face a triple whammy

Even though the average Social Security retirement benefit today is $2,088, some seniors get to collect considerably more. But no matter what benefit you're eligible to receive, it's important to recognize that it may not come your way in full. In fact, the factors above could all come together to whittle your checks down to practically nothing.

If you're working at age 65 while receiving Social Security today, it means you haven't reached FRA and might be subject to the earnings test. If you earn too much, you could have benefits withheld for that reason plus face taxes due to having too high a provisional income. And if you're on Medicare, your Part B premiums might be deducted, too. 

For this reason, it's important to understand the factors that cause Social Security checks to shrink. Doing so could help you avoid a financial shock.

Bottom line

Social Security may be a big part of your retirement plan. However, it's important to realize that your benefits may not be yours to keep in full, whether because you work prior to reaching FRA, you're subject to taxes on your benefits, you're enrolled in Medicare, or all three.

That's what makes a comprehensive plan for retirement income crucial. Whether you come up with that plan on your own or with the help of a financial advisor, you need to figure out what your spending needs look like and how much Social Security could actually pay you after accounting for all of the factors above. That should give you an idea of how much supplemental income you'll need so you are able to set yourself up for long-term success.

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