Hi Larry. I know a person's SSA benefit is calculated based upon one's highest 35 years of earnings (NOT adjusted for inflation). I plan to start taking my payments at age 70 but will continue to work full time through age 72 (health permitting). Presumably those extra two years of salary will be equal or greater than my current one, which is at the top of the value pyramid. Would replacing my two lowest-salary years (apx. $16K each) with the highest-salary ones (apx. $88K) increase my monthly benefit, or is it simply frozen at the point where I begin to collect? I would still have SSA funds being deducted from my paycheck, obviously.

Hi,

It's true that the earnings on which your Social Security retirement benefit rate is calculated aren't adjusted for inflation, but they are adjusted based on changes in average U.S. earnings. Earnings for calculation purposes are adjusted, or indexed, based on average earnings in the year that a person reaches age 60. Earnings starting with the year in which a person reaches age 60 aren't indexed for calculation purposes.

For example, say that a person turns 62 in 2020 and that average earnings in 2018 were $50,000. In that case, if average earnings in 1995 were $25,000, that person's earnings in 1995 would be multiplied by 2 (i.e. $50000/$25000) to get their indexed earnings for that year. So, if the person earned $30,000 in 1995, their countable earnings for benefit calculation purposes for 1995 would be $60,000.

That said, if you continue working past age 70 and you earn more in a year than you did in one or more of your previous 35 highest indexed earnings years, then yes your retirement benefit rate could be recalculated based on your new highest 35 years. Those types of recalculations are done automatically by Social Security, but you may be able to speed up the process by submitting proof of your earnings (e.g. W-2 form for wages, or Schedule SE from your tax return for self-employment) to Social Security along with a request for a manual recomputation.

Best, Jerry