How Your Final Years of Work Can Affect Your Social Security Benefit

Should you stay in full-time work, switch to part-time hours, or keep working longer than you originally planned before retiring?

If you have choices, it can be worth thinking about Social Security. What you earn in your final working years may affect your eventual benefit, especially if your record includes some lower-earning years.

Why your last job can influence Social Security

The Social Security Administration bases retirement benefits on your 35 highest indexed years of earnings. If your later career years pay more, those wages can replace lower-income years in the formula. For people who have fewer than 35 years of work history because of unemployment, caregiving, or other reasons, adding more years can help raise benefits. Years with no earnings count as zeros.

Your job title and the number of hours you work do not matter in the calculation. What Social Security looks at is simply how much you earned in a given year. Still, one additional year of work does not always lead to a meaningful increase.

Who may gain the most from working longer

People who had breaks in their careers, or who spent years in lower-paid jobs but now earn more, are often the ones most likely to benefit from staying in their current role a bit longer or taking on a new one.

Working a few more years can also help people who claimed Social Security early and are still employed. Higher earnings can still improve future benefits. In addition, if you claim before full retirement age, Social Security may withhold part of your benefits depending on how much you earn. Those withheld amounts are later added back through a higher monthly payment once you reach full retirement age, which is 67 for anyone born in 1960 or later.

How to tell whether staying on is worthwhile

If Social Security is a major factor in your decision, the first step is to log in to your my Social Security account and check your estimated benefit. The account also allows you to review your earnings history and spot missing years or low-earning years. That can help you make a decision based on your own numbers rather than broad advice that may not fit your situation.

Someone with a low-earning year may benefit more from continuing to work than someone who already has 35 steady, well-paid years on record. But Social Security should not be the only issue you weigh. Health, burnout, and job satisfaction also matter. Some people can retire on their savings and use Social Security to cover most living costs. Others may choose to wait before claiming, though delaying until age 70 can lead to larger checks.

Depending on your average earnings over your 35 best years and your current pay, your last job may have only a small effect. For others, that extra year of work can make a real difference in how long their money lasts. That is why it is important to review the numbers before you retire for good.