Social Security could end up being an important source of income for you once you retire. And so it's important to keep as much of your benefits as you can. These three moves will help you do just that.

1. Move to a state that doesn't tax benefits

There are 13 states that tax Social Security income:

  • Colorado
  • Connecticut
  • Kansas
  • Minnesota
  • Missouri
  • Montana
  • Nebraska
  • New Mexico
  • North Dakota
  • Rhode Island
  • Utah
  • Vermont
  • West Virginia

Now the good news is that most of these states offer exemptions for low and moderate earners. But if you expect to have a higher income in retirement, then you may want to find another place to call home.

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2. Keep your retirement savings in a Roth IRA

The federal government imposes taxes on Social Security benefits, too. Whether you'll have to pay them will depend on your provisional income.

Your provisional income is calculated by taking 50% of your annual benefit total and adding it to your non-Social Security income. Taxes on Social Security apply when your provisional income reaches $25,000 as a single tax-filer or $32,000 as a married couple filing jointly. But you may not reach those thresholds if you house your nest egg in a Roth IRA.

Roth IRA withdrawals are taken tax-free and don't count toward provisional income. And so if your only retirement income sources are Roth withdrawals and Social Security benefits, you might manage to keep the IRS at bay.

3. Don't earn too much if you're working and collecting benefits at the same time

Once you reach full retirement age (FRA), you can earn any amount of income without it impacting your Social Security benefits. But if you're working and collecting benefits simultaneously before reaching FRA, you'll be subject to the earnings test. And once your income exceeds certain limits, you'll risk having some of your benefits withheld.

Right now, you can earn up to $18,960 without having your benefits impacted. Beyond that, you'll have $1 in Social Security withheld per $2 of earnings you bring in.

If you'll be reaching FRA this year, the earnings-test limit rises to $50,520. From there, you'll have $1 in Social Security withheld for every $3 in earnings.

In 2022, the earnings-test limits are increasing to $19,560 and $51,960, respectively. And beyond these limits, benefits will be withheld as per the aforementioned guidelines. And so if you want to keep more of your benefits, make sure your earnings don't hit these thresholds.

Incidentally, withheld benefits are paid back to you later, once you reach FRA. But since you'll have to accept a reduced benefit for filing for Social Security before FRA, you might as well try to avoid losing some of that money temporarily.

Protect your money

Many people can't wait to get their hands on their Social Security benefits. And given that we all pay taxes on our earnings to qualify for them, that makes sense. Follow these tips so you can keep as much of those benefits in your own pocket once you begin collecting them.