Social Security retirement benefits aren’t just for those who have stopped working. In fact, you can claim these benefits as early as age 62 while continuing to work. However, this might lead to temporarily forfeiting part of your checks until you reach your full retirement age (FRA). But if you’ve already hit age 67 — the current FRA for most — you’ll get your full monthly check regardless of how much you earn. What’s more, your work at this stage could even increase your future benefits.
Let’s explore how working later in life impacts your Social Security benefits and why your highest-earning years matter.
How Social Security Calculates Your Benefits
Social Security uses a straightforward formula to calculate benefits based on your 35 highest-earning years, adjusted for wage growth over time. These years determine your standard benefit—the amount you’d receive monthly if you claim at your FRA. Starting earlier or later can reduce or increase this base benefit, but the foundation remains the same: your average monthly income during those top-earning years.
Imagine this scenario: In 2024, you earn $150,000, but one of your current 35 highest-earning years only includes an inflation-adjusted $40,000 from 1994. That high-income year of $150,000 will replace the lower-earning year in the calculation. As a result, your recalculated benefits could reflect a higher monthly payment.
So, a late-career earnings boost could make a meaningful difference in your retirement income.
Understanding the Wage Base Limit
While a significant income bump can raise your benefits, it’s essential to know about the wage base limit, which caps the income considered for Social Security taxes and benefits.
For 2025, this cap is $176,100. Any earnings above this amount won’t count toward your Social Security benefits calculation. For example, if you earn $200,000 in 2024, only $176,100 of that income will contribute to your benefits formula. If your earnings remain below the cap, every dollar you make could help increase your Social Security payout.
Checking and Updating Your Earnings Record
Here’s why this matters: if you discover missing or incorrect earnings, you can correct them with the Social Security Administration (SSA). By doing so, you ensure your actual income is accurately reflected, which could positively affect your benefits.
When Will You See an Increase in Benefits?
If your 2024 earnings result in a recalculated benefit, you may not see the extra money right away. The SSA typically updates your payment amount in December of the following year. For instance, a boost from 2024 earnings would appear in December 2025, with retroactive payments dating back to January 2025. While there’s a delay, the increase is well worth the wait.
The Bottom Line: Working Can Pay Off
For those nearing or at full retirement age, continuing to work can significantly impact your Social Security benefits. Whether it’s replacing a low-earning year or taking advantage of a high-income period, your efforts can translate to a larger monthly payout. Just keep the wage base limit in mind and regularly review your earnings record to maximize your benefits.
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