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Social Security Benefits: Which Work Years Matter Most?

Social Security benefits are crucial to your financial security, but it's easy to get confused about how they're calculated. Social Security uses a longer work history than many public pensions do, leading to different incentives for working longer.

In the following video from our Social Security Q&A series, Dan Caplinger, The Motley Fool's director of investment planning, answers a question from Fool reader Leigh, who asks whether her father is correct that Social Security calculates benefits based on the last five years you work. Dan replies that it sounds like Leigh's father is thinking about rules for public pensions, which are often based on salaries for the final few years of your career. Dan explains, though, that Social Security looks at your full 35-year work history, adjusting early-year salaries for inflation to make the amounts comparable. As a result, strategies for boosting your Social Security benefits aren't affected as much by a high-paying job late in your career, although that would make some impact.

How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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