Social Security benefits are a major part of many American retirement incomes. As people are living longer, many more are working past the age of 70. If this is you, or maybe you in the future, you are likely wondering if working past the age of 70 will increase your Social Security benefits.
How To Get the Maximum Social Security Benefit
Your Social Security retirement benefits are based on a combination of when you are taking benefits and your earning history. Waiting until age 70 will give you the largest monthly Social Security benefit. For 2021, the maximum Social Security benefit at age 70 is just $3,895 per month or $46,740 per year. This amount can increase with the Social Security cost-of-living adjustment (COLA), set to 5.9% for 2022.
Can Your Social Security Benefits Increase Past Age 70?
You are required to begin taking Social Security benefits by the age of 70. There would be no increase in benefits for trying to delay benefits beyond this age. However, you could increase your benefits if you continue working past the age of 70. There is no age or time that your Social Security income is frozen.
You will continue to pay into Social Security if you are working in a job that requires Social Security withholdings. Your earnings later in life could help cancel out a year where you didn’t earn much, thereby increasing the years of your work history used to calculate your Social Security benefits.
How Are My Social Security Benefits Calculated?
Social Security benefits are based on your 35 highest-paid working years, with some adjustments made for inflation. Earning $100,000 in 1970 is very different than making $100,000 in 2021. I won’t bore you with the specific details of the inflation adjustments here. Those who work less than 35 years will see lower benefits. So, working past 70 could help fill in the year with zero income or lower than average incomes. Shorter working histories are common for people with several years of schooling (think doctors) or parents who left the workforce to raise children. It could also apply to people who took time off work to care for an aging parent.
To get your final benefit, the Social Security Administration (SSA) calculates your Average Indexed Monthly Earnings or AIME. Your AIME is computed by dividing the sum of all your indexed wages by 420. Eventually, your actual Social Security benefit amount is calculated based on a variety of factors, such as the age at which you start collecting benefits. Remember, benefits will be lowered if you start taking them before full retirement age.
How Do I Get My Social Security Estimated Benefits?
I always recommend getting an estimate of your future Social Security benefits. You should check it more often the closer you are to retirement and on a less frequent basis, the further away you are from leaving the workforce. You can register to view your official Social Security work history and estimated future Social Security benefits on the SSA administrative site. Setting up an account is free.
While waiting to age 70 will result in the largest possible monthly Social Security benefit, this may not be the optimal age for everyone to receive the maximum lifetime benefit from Social Security. Consider your health and lifestyle, marital status, and financial need when choosing the time to claim Social Security benefits.