When Can Working Longer Make Your Social Security Benefits Higher?

One of the biggest decisions you’ll make in your life is your choice of when to retire. Unfortunately, far too many people don’t realize the decision of when to leave the workforce can affect their Social Security benefits. And not considering this can be a big mistake.

If you’re contemplating handing in your final notice, here’s what you need to know about how staying on the job a bit longer could potentially result in larger Social Security checks.

Working longer could let you delay filing for Social Security

In many cases, retiring isn’t possible without claiming Social Security to provide income. Unfortunately, if you claim your benefits early, you end up with smaller checks.

The Social Security Administration has designated a specific age as full retirement age (it’s 67 for people born in 1960 or later). If you retire prior to your full retirement age (FRA), you’ll see a reduction in your standard benefit. If you retire at 62 when your FRA is 67, your benefits would be 30% smaller.

Even if you wait until FRA to claim your benefits, they’ll still be smaller than if you’d waited until age 70. That’s because you can earn delayed retirement credits until that age to boost your benefits. If you retire at 70 when your FRA is 67, your checks would be 24% bigger than the standard benefit you’d have received at 67.

You can learn more in this guide to how your age at the time of filing affects your Social Security benefits. The bottom line: If working longer enables you to delay your benefits claim, your monthly checks will be larger.

Working longer could raise your benefits even if you didn’t plan to claim early

If you’re able to retire and still wait to claim Social Security, you may think retiring early won’t hurt your benefits. Unfortunately, this isn’t the case. In fact, leaving the workforce early could still reduce your benefits even if you’re able to rely on savings and wait until 70 to claim them. That’s because of the way your standard benefit is determined.

Your benefit amount is calculated based on a formula using your inflation-adjusted average wage in the 35 years you earned the most. If you work less than the full 35 years, you’ll have years of $0 wages counted. This reduces your average wage, making your benefit smaller. If you haven’t worked for a full 35 years and are thinking about retiring, you should strongly consider putting in a few more years.

And even if you have 35 years under your belt, you may still want to work longer if you’re earning more now than you did early in your career (after adjusting for inflation). Many people find that their salaries go up as their careers progress. If that’s true for you, then by working an extra year or two, you could replace early years of low wages with later years of higher earnings. This would increase the average wage used to calculate your monthly benefit, thus boosting the size of your checks.

Is working longer worth it to increase your Social Security check?

While early retirement may seem attractive, leaving the workforce before maximizing your Social Security checks could result in less money — and a lower quality of life — in retirement. Working longer can make a big difference, especially if it enables you to wait to claim benefits or if you otherwise wouldn’t have 35 years or more of work history.

Be sure to consider the trade-offs when you decide if you want to leave the workforce now or stay a few extra years to have more money to enjoy life later.

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