Why Working Longer Won't Boost Your Social Security as Much as You Want

Social Security is a key source of income for those in retirement. Everyone wants to make the most of the benefits they have coming to them, and getting as large a check from the federal government as possible can be the difference between just getting by and having the retirement you'd always hoped for.

Fortunately, there are some things that are within your control during your career to help increase the amount you'll eventually get from Social Security. But with respect to one of those things – choosing to work longer – it's important to understand exactly what impact you'll be able to make on the size of your monthly benefits. Otherwise, you could end up being disappointed.

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How to get more from Social Security

Workers have three levers they can use to help increase the size of their monthly Social Security check. They can boost their earnings, subject to the annual limit on wages and salary income subject to the Social Security payroll tax. They can elect to claim their benefits later, with the difference between what you can get at 70 being as much as 75% higher than what you'd be eligible to receive at age 62. And lastly, they can choose to extend their careers to ensure that they have a full work history that the Social Security Administration (SSA) will take into account.

Most people can't waltz into their supervisor's office and demand more pay. And although you might technically have the choice of when to claim your Social Security benefits, plenty of people find themselves in their early 60s having little financial choice but to take whatever they can get. So in that context, working longer can be the most attractive and feasible move.

How the government figures extra work into your benefits

In its calculations, the SSA takes your work history and adjusts your earnings from each year for inflation. It then takes the 35 top-earning years and averages them, then dividing by 12 to get average indexed monthly earnings (AIME). If you don't have 35 years of earnings, it fills in the missing years with zeros.

You can therefore see the potential benefit of extending your career in some cases. If you've worked fewer than 35 years, extra work can replace those zeros. And even if you have 35 years of earnings, it's the lowest-earning years that'll get kicked out if you make more now.

So take a simple example: You've worked 30 years and your pay has stayed the same the whole time except for cost-of-living raises. You're trying to decide whether to retire now or to work an extra three years. You do the math and see that working longer should add 10% to your AIME.

A sad surprise for many workers

The problem, though, comes in the next step of the calculation. With the AIME figure, the SSA uses a formula to determine your primary insurance amount (PIA). That formula has what are known as bend points, which determine the percentage of your AIME that gets added to your PIA. As you can see below in the formula that applies to those turning 62 during 2026, the percentage starts out very high for low earners, but then declines as income rises.

Data source: SSA.

To see how this plays out, consider a person who earned an inflation-adjusted $70,000 for 30 years and therefore has an AIME of $5,000. This worker's PIA would be 90% of $1,286 plus 32% of ($5,000-$1,286), which comes to $2,739.

If that worker added another three years of work history at $70,000 per year, the AIME would rise to $5,500. But running that through the Social Security benefits formula yields $2,899. That $160 increase is less than a 6% raise.

The effect is even greater for higher-earning workers. The PIA for someone who earned $140,000 for 30 years would be $3,563, but after 33 years, it would be $3,638 – only about 2% higher.

Know what you're signing up for

Obviously, there are other financial benefits to working an extra three years. You might be able to delay claiming Social Security or spend down your savings. You might even be able to make additional contributions to retirement accounts for future use.

Still, it's important not to overestimate the benefit of working longer on your Social Security benefits. That way, you won't be disappointed if the increase is smaller than you'd hoped.

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