What Effect Will It Have On My Benefit Rate If I Have Lower Than Normal Earnings Next Year?

Aug 11 2018 - 10:16am

I WILL TURN 66 (MY FRA) NOV 2019. I PLAN ON RETIRING FROM MY JOB NOV 2018 BUT WILL POSTPONE TAKING SS UNTIL AGE 66. MY ANNUAL INCOME FOR 2019 WILL BE ONLY 50% OF MY CURRENT ANNUAL SALARY. WILL THAT REDUCTION IN ONE YEAR OF INCOME AFFECT OR REDUCE THE MONTHLY SS BENEFIT IF I DONT CONTINUE TO EARN WHAT I CURRENTLY DO?

Hi,

Your Social Security retirement benefit amount will be based on your highest 35 years of wage-indexed earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf). If your 2019 earnings aren't one of your highest 35 years, then they simply won't be used in the calculation. Thus, they would then neither raise nor lower your benefit rate.

In other words, you can't lower your benefit rate because your 2019 earnings will be lower than normal, but they may not be high enough to raise your benefit rate at all or by as much as they would if you had higher earnings in 2019.

You can use our maximization software to calculate your benefit rate with and without your expected 2019 earnings so that you'll know for sure what effect they will have, if any. The software would also allow you to compare all of you filing options in order to help you determine your best strategy for claiming your benefits.

Best, Jerry