How You Can Maximize Your Social Security Benefit While Still Working

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Social Security is one of the cornerstones of most retirees’ income strategy in retirement. While you don’t want to rely solely on it to cover your expenses, having this fixed income can still provide peace of mind and stability during your post-working years. But did you know there are things you can do now, while you’re still working, to maximize your future benefits?

The average monthly Social Security retirement benefit is $1,781.63, how much you’ll receive depends mainly on when you start collecting benefits and how much you earn during your working years.1  

Here’s a look at the ins and outs of Social Security and what you can do to maximize your benefits in retirement.

First, Understand How Age Impacts Your Benefits

How much you receive in monthly benefits will depend on when you start collecting Social Security. While you’re still working, this is something to start considering carefully. For example, working a few extra years might enable you to grow your retirement savings and delay receiving benefits. The longer you wait to receive benefits, the more you’ll get per month (to a point). Here’s a look at how the age at which you start collecting benefits impacts how much you’ll receive.

If You Start Collecting at Age 62

Everyone can collect Social Security benefits once they turn 62 unless they collect survivor or disability benefits.

While you may become eligible as early as age 62, you may think twice about applying for those benefits. Collecting before your full retirement age causes a permanent reduction in your monthly benefits. This reduction can sometimes be as high as 30% over your lifetime.

If You Start Collecting at Full Retirement Age

Your full retirement age will depend on the year you were born, though anyone born after 1960 has a full retirement age of 67.

Why is your full retirement age important? Because this is the point at which you are eligible to receive full Social Security benefits, which is your primary insurance amount (PIA). If you’d like to know your PIA, you can create a My Social Security account and use their benefits calculator to preview your monthly benefits.

If You Start Collecting at Age 70

You’ll earn delayed retirement credits every month you delay receiving benefits until age 70. Once you reach 70, the delayed credits stop, and there’s no further incentive to wait to collect.

For example, if your full retirement age is 67 and you delay payments until age 70, you’ll receive 124% of your full retirement age benefits.2  

Can You Stop and Restart Benefits for a Bigger Monthly Payment?

Say you started to receive benefits at the earliest possible opportunity (age 62) but later realized you’d rather wait and get a more significant monthly payment. Or, you might have started taking your benefits early out of financial necessity, then received a sudden windfall (like an inheritance, lawsuit payout, or lottery winnings).

If you meet specific criteria, you can stop and restart Social Security benefits later.

The Social Security Administration (SSA) allows retirees to withdraw their original application for benefits as long as it’s within 12 months of the original application date. You can only withdraw the application one time. But if accepted, the SSA will stop all payments. The catch is that you must repay everything you’ve received thus far. This includes any retirement benefit payments, family benefits (such as payments received by a spouse), and anything withheld from your benefits (like Medicare premiums). 

If you’ve exceeded the 12-month window to withdraw your application but still want to increase benefits later, you have another option. Once you reach full retirement age (around 67), you can opt to suspend benefits. For every month you suspend your benefits, you’ll accrue delayed credits. When you reinstate your benefits, those delayed credits will get added to your monthly payment.

What Is COLA?

COLA stands for “cost of living adjustment.” For those receiving Social Security benefits, COLA is an increase in pay or benefits dependent on the rising cost of goods and services.

Over the past few years, the COLA has shifted both up and down to best match the needs of the people that depend on it — primarily, those who live on fixed incomes.

The SSA calculates COLA by looking at the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). They consider this the official measure of monthly price changes for sectors like food, energy, and Medicare. The Bureau of Labor Statistics tracks this index. It calculates COLA by taking the average CPI-W for July, August, and September of the previous year and the average of July, August, and September of the current year. That percentage is the COLA for the following year. 

Following a year of high inflation, the COLA for 2023 was 8.7%. For context, that’s the highest COLA adjustment since 1980, when it hit a record 14.3%. Within the last decade, COLA has reached as low as 0% and has generally hovered between 1% and 3%.3   

How Many Working Years Does the SSA Use?

To determine how much you or your spouse will receive in Social Security benefits, the SSA uses 35 years of work history. They’ll calculate the “average indexed monthly earnings” (AIME) to summarize your 35-year earnings history. From there, the SSA applies a formula to your AIME to determine your PIA.

Your PIA then serves as the basis for your monthly benefits. As mentioned, your monthly benefits will be less than your PIA if you retire before full retirement age. If you delay benefits, they’ll be higher than your PIA.

Know What Benefits You’re Eligible For

There are cases when Social Security can benefit people other than the worker who earned them.

Examples of other benefit types include:4  

  • Survivor benefits: Should the primary worker pass away, benefits may go to their widow or widower, minor children, older disabled children, or dependent parents.
  • Divorced survivor benefits: If an ex-spouse fits the criteria and has not remarried, they may be eligible to receive survivor benefits after the worker’s passing.
  • Spousal benefits: If the worker’s spouse is also 62 or older (or cares for a minor child), they may be eligible to receive up to half of the worker’s PIA benefit amount.
  • Divorced spousal benefit: Some eligible ex-spouses may also receive spousal benefits from the worker if they meet the SSA’s criteria.

Bottom Line? Wait As Long as You Can to Collect Benefits

The SSA rewards those who can delay receiving benefits past their full retirement age — as much as 8% per year.

Of course, this decision must be considered alongside your greater financial plan and retirement income strategy. In some cases, delaying benefits may not be the best choice for you or your family, for example.

As you prepare for retirement, working with a financial professional who can take a holistic approach to your financial plan is essential. Don’t hesitate to contact our team anytime to discuss your current savings strategy and how we can help.


1Monthly Statistical Snapshot, February 2023

2If you were born between 1960 your full retirement age is 67

3Cost-of-Living Adjustments (COLA)

4Types of Beneficiaries

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