Social Security benefits are an important part of many U.S. retirement incomes. Because people are living longer, many more people are working after the age of 70. If this is you, or maybe in the future, you’re probably wondering if working after age 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 receive benefits and your income history. If you wait until age 70, you will get 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 may increase with the Social Security Cost of Living Adjustment (COLA), set at 5.9% for 2022.
Can Your Social Security Benefits Raise the Age of 70?
You must start taking Social Security benefits at age 70. There would be no increase in benefits if you try to defer benefits after this age. However, you can increase your benefit if you continue to work after age 70. There is no age or time when your Social Security income is frozen.
You will continue to pay to Social Security if you work in a job that requires Social Security withholding. Your earnings later in life can help negate a year when you didn’t earn much, 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 employment years, with some adjustments for inflation. Making $100,000 in 1970 is quite different from making $100,000 in 2021. I won’t bore you here with the specifics of inflation adjustments. Those who have worked for less than 35 years receive a lower benefit. So working past 70 could help fill the year with zero or lower than average income. Shorter work histories are common among those with several years of schooling (think doctors) or parents who have left the workforce to raise children. It may also apply to people who have taken time off from work to care for an elderly parent.
To get your final benefit, the Social Security Administration (SSA) calculates your average indexed monthly earnings, or AIME. Your AIME is calculated by dividing the sum of all your indexed wages by 420. Ultimately, your actual Social Security benefit is calculated based on several factors, such as the age you start collecting benefits. Keep in mind that benefits will be reduced if you start using them before full retirement age.
How do I get my estimated Social Security benefits?
I always recommend getting an estimate of your future Social Security benefits. You should check it more often the closer you get to retirement and the less often you leave the workforce. You can register to view your official Social Security work history and estimated future Social Security benefits on the SSA administrative site. Creating an account is free.
While waiting until age 70 will result in the largest possible Social Security monthly benefit, this may not be the optimal age for everyone to receive the maximum Lifetime Social Security benefit. Consider your health and lifestyle, marital status, and financial needs when choosing when to claim Social Security benefits.