Social Security's full retirement age (FRA) is 67 for anyone born in 1960 or later. At FRA, you're entitled to your full monthly Social Security benefit based on your personal earnings history.
If your FRA for Social Security is 67, you may be inclined to retire at that time. But if you want to get more out of Social Security, then it could be worth it to work a bit longer for these two reasons.
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1. Holding off on Social Security means boosting your benefits in the process
Although you're entitled to your full monthly Social Security benefit at FRA, for each month you delay your claim beyond that point, up until age 70, that benefit will grow. If your FRA is 67 and you hold off on claiming Social Security until age 68, you'll boost your monthly benefit by 8% on a permanent basis. Wait until age 70, and you're looking at a 24% boost.
So, let's say you're entitled to $2,000 a month from Social Security. Waiting until age 70 to file for benefits would leave you with $2,480 a month instead. That's an extra $5,760 a year of income.
Now you don't have to keep working in order to delay your Social Security filing past FRA. If you can afford to live on your savings for a few years, you can close out your career at FRA and just hold off on Social Security to grow your monthly benefit.
But many people can't afford to not work unless they have Social Security income coming in. So in many cases, the ability to wait until age 70 to file for benefits hinges on continuing to work.
2. Working longer at a higher wage could render you eligible for a higher monthly benefit
The monthly benefit you're entitled to from Social Security will be based on your lifetime earnings. But many people close out their careers with higher earnings compared to their wages when they were just starting out.
So, let's say you're earning a much higher salary at age 67 than you were in your 30s, 40s, and 50s. Your monthly Social Security benefit will be based on your 35 highest-paid years of earnings. If you keep working until age 70, you get to keep your higher salary -- and replace a few years of lower income with a higher income in your Social Security benefits calculation.
A move to consider
All told, working longer could really benefit you as a retiree. It might set the stage for a higher Social Security benefit for life. But in addition to that, it might also allow you to leave your nest egg untapped for a few extra years so you have more of a cushion. That could, in turn, spare you a lot of stress if unplanned expenses arise during your retirement.
Plus, working longer could be a good thing for you mentally and physically. Having a job to go to might serve as a social outlet, and it might get you up and moving on a regular basis. So that, plus the upside from a Social Security standpoint, is something to strongly consider.
