Ask Rusty – Will My Social Security Increase if I Keep Working After Applying?
Dear Rusty: I am going to be 67 in a few weeks & I plan on working for another year or two. According to Social Security, they count the best 35 years to come up with your benefit. I currently have 30 years, with 2024 and 2025 taxes yet to be filed. If I take my benefit now, will I get an upward adjustment after filing my taxes for those years, or do I need to wait to apply for SS until after filing my taxes to get credit for those years? Signed: Still Working
Dear Still Working: Whenever you claim your Social Security benefit, SSA will look at your lifetime earnings record on file at the time (as received from the IRS) and calculate your “primary insurance amount” (PIA) using that record on file. They will use your highest earning 35 years to do that calculation and, if you do not yet have 35 years, they will use “zero $$” enough times to make it 35 years. In other words, your benefit will always be calculated using 35 years, whether you actually have 35 years of earnings on record, or not.
However, Social Security revisits your earnings record whenever additional information is received from the IRS, so if file your taxes and add the additional year’s income after you start your Social Security benefits, you will get credit for those additional earnings. Essentially, you will be replacing one of the “zero $$” years originally used to calculate your benefit amount, and Social Security will recalculate your monthly amount to reflect that, resulting in an increase to your monthly benefit.
Thus, as long as you work and earn and report your earnings to the IRS, Social Security will update your record and automatically give you a higher benefit if warranted by your more recent earnings. That recalculation usually happens later in the year (after April 15th), but Social Security will make any increase retroactive to the beginning of the calendar year, so you will get any higher benefit effective with January.
So, since you have already reached your full retirement age (FRA), you can (if you wish) apply for Social Security now and be confident that Social Security will give you credit for any additional earnings after you apply. And for clarity, if you choose to wait beyond your full retirement age to claim, you will earn Delayed Retirement Credits (DRCs) which will continue to increase your monthly benefit amount until you are 70 years of age. DRCs will add 8% to your PIA for each full year you delay (.667% for each month you delay past your FRA).
Ask Rusty – When is the best time for me to claim Social Security?
Dear Rusty: I will be 66 ½ in June and would like to discuss when would be the best time for me to start taking my social security benefits. I am still employed full time and don’t want to be penalized because of that. Please let me know what I need to do to set up an appointment with you. I got your information from the AMAC website, and I look forward to hearing from you. Signed: Ready to Claim
Dear Ready: You can certainly call us on 1.888.750.2622 during normal EST business hours for a personal conversation. But to facilitate that conversation, be aware that deciding when to claim your Social Security benefit normally depends on just a few factors, including your financial need, your health and expected longevity, and your marital status. A few things to be aware of:
• Born in 1958, your “full retirement age” is age 66 years and 8 months. If you were born in October 1958, you will reach you FRA in June 2025, and that is the point you can get 100% of the SS benefit you’ve earned from a lifetime of working.
• Once you reach your FRA in June, Social Security’s “annual earnings test” no longer applies. Thus, you can continue working after you start your SS benefits and your earnings will not negatively affect your monthly benefit amount. If you claim any earlier than your FRA, you will get a smaller benefit and also be subject to Social Security’s annual earnings test (which for you this year - your FRA year - is $62,160, or $5,180/month after you start your SS benefits). If you decide to claim before your FRA, your benefit will be reduced by .556% for each month early (a permanent reduction).
• You can also wait beyond your FRA to claim and earn Delayed Retirement Credits (DRCs) at the rate of .667% per month (8% per year of delay), in order to get an even higher benefit later. If financially feasible, you can delay up to the age of 70 when your monthly benefit will reach maximum - about 27% more than it will be in June of this year.
• If you are single and will not be eligible for a spousal benefit, then you should make your claiming decision based only on your own needs. If, however, you are married and your spouse’s FRA benefit is more than twice your FRA amount, you may be entitled to a “spousal boost” (a supplemental amount added to your own SS benefit).
• Your life expectancy should be considered when deciding when to claim your SS retirement benefits. If you expect to enjoy at least “average” longevity (about 87 for a woman your current age), then you might also consider delaying your claim (if financially feasible) and that is often a prudent choice. If you don’t expect to achieve a long life, or if you need the money sooner, or if you are entitled to spousal benefits, then claiming at your FRA of 66 years and 8 months is likely your best option.
In the end, only you can decide when you should claim your Social Security, but we’re always here to answer any additional questions you may have. You can feel free to call us at any time (1.888.750.2622) during normal EST business hours to discuss your options directly with one of our certified Social Security advisors. Or you can also ask any additional questions via email, which we will be most happy to respond to promptly.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation's staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.