How Your Top 35 Earnings Years Affect Each Social Security Payment

Most people know they can start collecting Social Security once they reach age 62. What is less widely understood is how those benefits are actually calculated.

The Social Security Administration looks at your 35 highest-earning work years to figure out what you will receive. If you worked fewer than 35 years, any missing years are treated as zeros, which lowers your average. Knowing how this formula works can help you make smarter choices about when to claim benefits.

How the 35-year rule works

The Social Security Administration adds up your earnings from your 35 best-paying years and uses that information to calculate your average indexed monthly earnings, or AIME. That figure is then used to determine your benefit amount. The agency explains the AIME formula in detail on its website.

Only income subject to Social Security payroll taxes counts toward the calculation. Earnings above the annual taxable maximum do not raise your future benefit.

Why missing years and low-earning years matter

Years with low pay, along with years when you did not work at all and are counted as zeros, can pull down your average. If you were laid off, spent time job hunting, or stepped away from the workforce to raise a family, those lower-earning years can reduce your eventual monthly check. Retiring early has the same effect.

On the other hand, working beyond 35 years can replace those zero or low-income years with higher-earning ones. Many people earn more later in their careers than they did at the start, and those additional years can lead to larger benefits.

What workers can control

Your entire work history affects your Social Security benefit, but there are ways to improve the outcome. You may be able to increase earnings by pursuing a raise, changing jobs, or taking on part-time work. Higher pay later in life can help offset the zeros and low-income years that often come earlier in a career.

You can also keep working past 35 years so that lower-earning years are replaced with stronger ones. Extra years of work may also give you the option to delay claiming Social Security, which can increase your monthly payment. You can begin benefits as early as age 62, but waiting until full retirement age, typically 66 or 67, results in a larger check. Delaying until age 70 increases the benefit even more, after which no additional delayed retirement credit is added.

Social Security is not determined only by what you earn right now. Understanding the rules can help you choose both the right retirement age and the right time to file for benefits.