How Your Final Job Choice Can Affect Your Social Security Benefits

Before retirement, should you keep working full-time, switch to part-time hours, or even stay on the job longer than you first expected? If you have flexibility, Social Security may be worth weighing carefully.

Your earnings in your final working years can shape your eventual benefit, particularly if your record includes several low-earning years.

Must Read

Why a final job can influence Social Security

The Social Security Administration calculates retirement benefits using your 35 highest years of indexed earnings. If your later years come with a better-paying position, those wages can replace earlier years with lower pay. For people who do not have a full 35 years because of unemployment, caregiving, or other gaps, additional years of work can raise benefits because years without earnings are treated as zeroes.

Your job title and the number of hours you work are not part of the formula. What matters is how much you earn in a given year. Even so, one extra year of work does not always lead to a meaningful boost in benefits.

Who stands to gain most from working longer

People who had a break in employment or spent years in lower-paid work but now earn more are often the ones most likely to benefit from staying in the workforce a bit longer or taking a new job.

Working a few more years can also help people who started Social Security early and are still employed. Higher earnings can still improve future benefits, and Social Security may temporarily withhold part of your check if you have not yet reached retirement age and your earnings are above the limit. Those withheld amounts are later reflected in larger monthly payments once you reach full retirement age, which is 67 for people born in 1960 or later.

How to judge whether continuing to work makes sense

If Social Security is the main factor in your decision, begin by logging into your my Social Security account to check your estimated benefit. The same account also allows you to review your earnings history for missing or unusually low years. That can help you make a decision based on your own record rather than on broad advice that may not fit your situation.

Someone with a weak earnings year may gain more by working longer than someone who already has 35 steady, well-paid years. Still, Social Security should not be the only consideration. Health, fatigue, and overall job satisfaction matter too. Some people can retire with their savings and rely on Social Security to cover much of their day-to-day costs. Others may choose not to wait until age 70, even though delaying can produce larger monthly checks.

In some cases, a final job may make only a small difference in the size of your benefit, depending on your average earnings across your 35 highest-earning years and what you are currently making. For other workers, that extra year can play a bigger role in stretching retirement income. Reviewing the numbers before you stop working for good can help you decide what is best.