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Tax Advantages of Working After 65

By Jerry Shaw   |   Thursday, 03 Sep 2015 01:44 PM

People who delay retirement might do so for financial reasons or because they simply love what they do. There are also some tax advantages to working after age 65, which can help boost income and pad retirement savings.

These four tax advantages can improve the financial standing of people working after 65.

1. By continuing to work past full retirement age, people have a longer timeframe available to save more for retirement. Even if income is lower as a person continues to work after 65, it allows time to convert money from qualified plans to after-tax plans that will reduce the tax hit when money is withdrawn, according to U.S. News and World Report. Conversions to a Roth IRA, for example, provide the benefit of distributions that aren’t taxed.

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2. Working after 65 also gives a person time to consider relocation that might reduce taxes. Finding a job or an appealing area can cut living expenses and provide tax advantages. Some states have no state income tax or low sales and property taxes.

3. Working after age 65 can bring tax advantages in the health care area, Forbes noted. People can use their extra income to put into a health savings account (HSA) that provides tax-free distributions to pay for health care necessities.

4. People who continue to work after age 65 can receive more Social Security benefits if they wait till after 65. The benefits are combined with income from other retirement plans to determine if the Social Security distribution is taxed.

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People who delay retirement might do so for financial reasons or because they simply love what they do. There are also some tax advantages to working after age 65, which can help boost income and pad retirement savings.
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