How is Benefit Amount Calculated?

Q: I’m 59 years old. I worked from 1968 to 1992. My highest earnings year ($35,570) was in 1991. My projected Social Security benefit at age 62 is $863 a month. If I go back to work now, what would I have to earn, and for how long, to significantly increase my monthly benefit?

You can significantly increase your monthly benefit just by postponing your application for Social Security. Even if you don’t work another day, you could boost your benefit to $1,151 a month – one-third more than you’d get at age 62 – by waiting until you’re 66 to start collecting it. (That extra $288 a month is just for the four-year delay; it doesn’t include any annual inflation adjustments, which would raise the amount even more.)

Returning to work also can increase your benefit, even if you earn less than your peak salary. Your monthly Social Security benefit is based on your 35 highest-earning years. Someone who retires from high-paying work after 40 years can boost his benefit a bit, even if he returns to work in a lower-paying job for only a year, because his new earnings may replace an early, lower-paid year in the benefit computation. See full details in this article: