Ask Larry

How Would Two Years Of Not Working Affect My SS Benefit Rate?

Dear Larry,

I turned 63 this June and was laid off at the end of August, 2018. So far I have not had any positive replies to my resume. We have enough money set aside to make it August of 2019, I'll turn 64 in June of 2019. My wife is 10 years my junior, we are planning to sell are home in the spring 2019. My wife does work full time and is now carrying our medical insurance. She plans on continuing to work.
If I retire next summer and start to draw on my 401K but do not start my SS retirement until I reach my full (100%) age at 66 years and 2 months which would be August of 2021, how would the 2 years of not working effect my SS monthly benefit? Is this even possible?

We have $400,000 in my 401K fund.

If I can retire and draw on my 401K can I still work and earn some money like you can when getting SS.

Thank you for your time and advice.



Hi Guy,

It's certainly possible to stop working at age 63 but not start drawing your Social Security benefits until your full retirement age (FRA). You will receive your full retirement age rate if you start drawing your retirement benefits at FRA regardless of when you stop working. And, if you wait until age 70 to start drawing, your benefit rate would be roughly 30.66% more than your full retirement age rate.

Your full retirement age rate, which is also referred to as your primary insurance amount (PIA), could be affected by the fact that you stopped working early, though. Social Security retirement benefits are calculated based on an average of the worker's highest 35 years of wage-indexed earnings ( If you don't have earnings after age 63 those years simply won't be used in calculating your benefit rate, assuming that you already have earnings in at least 35 previous years. The only potential loss in your benefit rate that would result from stopping work early is the fact that you won't increase your PIA by replacing lower past earnings years with the higher earnings years that you otherwise might have had if you had continued working.

You can make 401k withdrawals and still have earnings, but there are potential tax considerations involved. Social Security is my only area of expertise, though, so I can't help you with those issues.

You may want to strongly consider subscribing to our software in order to determine your best strategy for claiming your benefits. Our Maxifi program ( may be of particular interest to you, as it's a comprehensive financial planning tool that could also help you with your 401k and taxation planning.

Best, Jerry

Oct 2 2018 - 9:21am
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