Many seniors end up relying on Social Security as a critical source of income. And if you don’t have the largest nest egg for retirement, you may be pretty dependent upon those benefits to cover your senior living costs.
Anyone in that boat should do what they can to boost their benefits. And one easy way to do so is to delay a Social Security claim beyond full retirement age (FRA).
FRA kicks in at 66, 67, or somewhere in between, depending on year of birth. But it’s possible to accumulate delayed retirement credits that raise your Social Security benefits up until age 70.
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And for each year you hold off on filing, your benefits will grow 8%. So if you’re looking at an FRA of 67 and you delay Social Security until age 70, you’ll see your monthly benefits increase 24%.
But that’s not the only thing you can do to raise your Social Security benefits. There’s another step you can take to eke out more money — even if you’re already receiving benefits monthly.
It’s not too late to snag another boost
Once you turn 70, you can no longer accrue delayed retirement credits to grow your Social Security benefits. And so there’s really no sense in putting off your filing beyond your 70th birthday.
But that doesn’t mean you can’t boost your benefits at all from that point onward. If you continue to work full-time, you might raise your benefits due to your income.
See, the Social Security Administration (SSA) takes your 35 highest-paid years of earnings into account when calculating your monthly benefit. But that doesn’t mean you can’t keep earning money and having that income count once you’re receiving benefits.
So, let’s say you filed for Social Security at age 70 but are still working during your 70s. What’ll happen is that the SSA will take your earnings into account each year and recalculate your benefits based on them. So if, for example, you’re earning more money now than you did earlier on in your career, the salary you earn one year in your 70s might replace the salary you earned one year in your 30s or 40s, thereby leading to a higher monthly benefit during retirement.
You should also know that there’s absolutely no penalty for working and collecting Social Security at the same time once you’ve reached FRA. Prior to FRA, you’ll need to be careful, because too much income could make it so that some of your benefits are withheld. But if you’re past FRA, the amount of money you earn at a job can only impact your benefits for better — not worse.
Extending your career could pay off
There are plenty of perks to working well into your 70s (or even beyond, if you’re able to and so choose). Not only might the extra income be nice, but work might serve as a social outlet for you at a time when you might otherwise start to feel lonely and isolated.
But you should also know that earnings you collect later in life can result in a higher monthly Social Security benefit. And that’s yet another reason to push yourself to work longer.
The $18,984 Social Security bonus most retirees completely overlook
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