In 2025, millions of retirees are relying on Social Security to keep them afloat—but is it really enough? With prices rising on everything from groceries to medical care, more seniors are finding that their monthly check doesn’t stretch as far as it used to. And here’s something you might not know: filing a tax return, even if you’re not required to, could lead to extra income through credits, refunds, and rebates.
Let’s break down why Social Security alone may not be enough—and how a simple tax return could open the door to hundreds or even thousands of extra dollars.
Gap
The average monthly Social Security check in 2025 is around $1,976. That comes out to about $23,712 a year. According to the Bureau of Labor Statistics, the average retirement household spends about $4,581 each month—totaling nearly $55,000 a year.
That leaves a gap of over $2,600 every month.
| Category | Average Amount |
|---|---|
| Social Security (Monthly) | $1,976 |
| Retirement Expenses (Monthly) | $4,581 |
| Monthly Shortfall | $2,605 |
| Annual Shortfall | $31,260 |
Without other sources of income—like pensions, investments, or part-time work—Social Security simply isn’t enough to maintain a basic standard of living.
Credits
Even if your income is low and you’re not legally required to file a return, doing so could give you access to money you didn’t know you qualified for. Refundable tax credits can lead to actual cash back, not just lower taxes owed.
Earned Income Tax Credit (EITC)
In 2025, the EITC could be worth up to $7,830. You only need a small amount of earned income to qualify. If you had even $4,000 in part-time or gig work, you might get a nice chunk of that credit.
But here’s the catch: you have to file a tax return to get it.
State-Level Credits
Many states offer their own programs for seniors and low-income residents. These can include:
- Property tax relief
- Energy and utility bill credits
- Sales tax refunds
- State EITC programs
Most require a federal or state return to verify income.
Tax
A lot of retirees don’t realize that Social Security can be taxed based on your income. Here’s how it breaks down:
| Filing Status | Taxable Thresholds |
|---|---|
| Single | Tax starts at $25,000; up to 85% taxable |
| Married Filing Jointly | Tax starts at $32,000; up to 85% taxable |
Your “combined income” includes:
- Adjusted Gross Income (AGI)
- Nontaxable interest
- 50% of your Social Security benefits
By carefully managing your withdrawals and income sources, you may be able to reduce or avoid taxes on your benefits.
Actions
Here are steps you can take now to boost your financial security in retirement:
1. File Your Taxes Every Year
Even if you think you don’t have to. Use Free File or find a Volunteer Income Tax Assistance (VITA) center to help. You may uncover hidden money waiting for you.
2. Take On Flexible Work
Seasonal or freelance work could not only help with bills but also make you eligible for the EITC or other credits.
3. Delay Social Security
If you haven’t started collecting yet, waiting until age 70 can increase your benefits by up to 8% per year past your full retirement age.
4. Withdraw Strategically
Only take what you need from retirement accounts like IRAs or 401(k)s. Lower income means less tax on Social Security.
5. Use Roth Accounts
If possible, convert to a Roth IRA for tax-free withdrawals in the future. Roth income doesn’t count against Social Security taxation thresholds.
6. Build Passive Income
Consider dividend-paying stocks, fixed annuities, or rental income. These can help cover the gap without overloading your tax bracket.
7. Downsize or Move
A smaller home or a lower-cost area could reduce your monthly expenses and property taxes significantly.
Story
Take Maye, a 68-year-old retiree in Michigan. She made $5,000 from seasonal work and received $1,200 in EITC and a $250 property tax refund—just by filing a return. That extra money helped her avoid dipping into savings and even qualified her for a winter utility credit.
All it took was one tax return to boost her income by over $1,400.
FAQs
Is Social Security taxed in 2025?
Yes, up to 85% is taxable depending on your total income.
Do I have to file taxes if I only get Social Security?
Not always, but filing can help you get credits or refunds.
Can I get EITC if I’m retired?
Yes, if you earned a small income from part-time or gig work.
What’s the average Social Security benefit in 2025?
Around $1,976 per month or $23,712 per year.
How much does the average retiree spend monthly?
About $4,581 per month according to 2024 data.
