Excerpt from “Social Security: Maximize Your Benefits”

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How Working After Retirement can Affect Your Benefits

According to the Social Security Administration (SSA), working beyond your full retirement age (FRA) will allow you to increase your monthly benefit in two ways:

First, each year you work adds another year of earnings to your Social Security record.  Higher lifetime earnings may mean higher benefits when you retire. The Automatic Earnings Reappraisal Operation (AERO) is a computer operation that re-examines earnings not previously considered in the original appraisal of your work record.  If earnings for the year are higher than the earnings that were used in the original benefit computation, the SSA substitutes the new year of earnings. The higher the earnings, the more your “re-figured benefit might be”. AERO is run twice a year, usually in late October and the following March. The payments reflecting the increased benefits are issued in December and May.

Second, your benefit will automatically increase by a certain percentage from the time you reach your full retirement age until you start receiving your benefits or until you reach age 70. This is called Delayed Retirement Credits (DRCs) and the annual percentage of increase varies depending on your year of birth. For example, if you were born in 1943 or later, the SSA adds eight percent per year to your benefit for each year that you delay claiming Social Security benefits beyond your FRA.  If you delay claiming your benefit for four years, you will increase your monthly benefit by 32 percent.

For more information about this process see “How Work Affects Your Benefits” available online at the SSA Web site located at www.socialsecurity.gov/pubs/10069.html.



About ksindell

Kathleen Sindell, Ph.D. is the author of numerous academic, popular, and professional finance articles, Web sites, proposals, and books. This includes the bestselling reference book, "Investing Online for Dummies, Eds 1-5" (listed for two consecutive years on the Wall Street Journal's Bestselling Business Book List). Her most recent book "Social Security: Maximize your Benefits" has been listed in Amazon's Top 100 Bestselling Retirement Planning Books. It is important to note that "Social Security: Maximize Your Benefits, 2nd Edition" was just released. Sindell has an in-depth understanding of the financial services industry and has held Series 7, 63, and 65 licenses. Dr. Sindell is regularly tapped as a financial services expert on ABC World News, The Nightly Business Report, and at popular online and print outlets. Kathleen Sindell, Ph.D. is a member of the Board of Directors for the Financial Planning Association, National Capital Area (FPA NCA), is on the Editorial Advisory Panel of the Journal of Financial Planning, and is Co-Chair of the Metro Washington Financial Planning Day. Sindell is a Course Chair II, CFP Program Academic Officer, and adjunct full-professor at the University of Maryland, UMUC, School of Undergraduate Studies. Contact Information: ksindell@kathleensindell.com or 703-299-1700
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