Some people decide at a certain point during their career that they want to retire at a specific age, and boom — that decision is set in stone. There's nothing wrong with aiming to retire at a certain point in time. But you should know that in some cases, delaying your retirement by even a couple of years could have a big impact on your Social Security income. Here's why.
1. You might make up for a shorter work history
The monthly Social Security benefit you're eligible to receive in retirement will hinge on how much you earn during your 35 highest-paid years in the workforce. But some people end up taking extended career breaks for a variety of reasons — to raise children, care for aging family members, or go back to school to facilitate a career switch.
If you don't have a full 35 years of earnings under your belt, then for each year you're missing an income, you'll have a $0 factored into your Social Security benefits calculation. But if you delay your retirement a bit and work longer, you can replace some of those $0s with an actual salary. The result? More Social Security for you.
2. You might put yourself in a position where you can delay your Social Security claim
You're entitled to your full monthly Social Security benefit based on your personal earnings history once full retirement age (FRA) arrives. That age is 67 if you were born in 1960 or later.
Now you may be aware that you can sign up for Social Security before FRA — as early as age 62 — for a reduced monthly benefit. Similarly, you're able to delay your filing past FRA for a boosted monthly benefit for life.
That incentive runs out once you reach the age of 70. But let's say your target retirement age is 67, and that that coincides with your FRA. If you're able to work until 68 instead and wait to claim Social Security during that time, you can give your monthly benefit a permanent 8% boost. Hold off until age 69, and you're looking at a 16% boost. Considering that you may end up collecting Social Security for 20 years or more, that's huge.
Working longer could really pay off
After a lifetime of hard work, you deserve to eventually be able to say enough is enough. But in some cases, it could pay to push yourself to work a bit longer than planned. Making that sacrifice could really set you up with a lot more Social Security income for life.
And remember, you don't necessarily need to commit to full-time work if that isn't feasible or desirable. A part-time wage, for example, coupled with a modest reduction in spending, could be enough to cover your bills for a year or two while you wait to file for Social Security.
So if you can't fathom the idea of working longer on a 40-hour-a-week basis, look to go part-time. You might appreciate that transition into retirement regardless of its impact on your Social Security benefits.
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