Will working longer, or part time, increase, or decrease, my Social Security benefit?

Investing_moneyMost people don’t know how their Social Security benefit is determined. Being unaware leads to this very common question – Will working longer increase, or decrease my Social Security benefit?

 

Working longer, even part time, will NOT reduce your benefit. And in some cases, may increase your benefit.

The below short article explains in simple terms how your benefit is determined based on how many years you work. The article then shows briefly when working longer, even at reduced pay, may be beneficial for you.

 

The key is understanding how many years you’ve worked and how many more you may work. Where can you find this information instead of trying to remember what years you worked, and what years you may have taken off (or not worked in a job that participated in the payroll taxes for Social Security)?

Simply go to Social Security’s MyAccount and create (or sign in if you’ve already created it) online access to your Social Security report which you can access anytime. Count up how many years you have on record. These count towards the 35 years. How many more years do you plan on working? These also count. By the way, if you see zeros, or low numbers, in years you know you worked or earned more than reported, that’s a problem that should be corrected right away. Social Security’s website explains how to do a correction. You want to get all the benefits you’re due when the time comes, and zeros or under-reported income means less (unless you have 35 other years reported that are higher already).

Do Late-Career Wages Boost Social Security More for Women than Men? Two findings in the findings in the research in the linked report stand out to me:

  • Because most workers – and especially women – have low-earning years to replace, efforts to further increase the retirement age are likely to increase Social Security benefits by increasing workers’ career average earnings.
  • Women who delay retirement all the way to their 70th birthdays increase their benefits by 76 percent from the actuarial adjustment, and 12 percent from late-career earnings; this total increase of 88 percent compares to 82 percent for men.

Ever wonder about people over 70 who are already receiving Social Security and still are working? Yes, IF this year’s earnings are higher than any of their prior years once adjusted, their Social Security benefit still goes up and they get more than they used to.

Photo by By 401(K) 2012 [CC BY-SA 2.0], via Wikimedia Commons

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