I was a stay-at-home mom for a few years and had no earnings during that time. If I continue to work after my full retirement age of 66, will that increase my benefits? --A.C., Stanhope, N.J.
It's possible. Your Social Security benefits are based on your 35 years of highest earnings. If you worked for fewer than 35 years, you have some years counting as $0 in your Social Security calculation. Replacing some years in which you had $0 with full-time or part-time earnings may boost your Social Security benefits.
Here’s a vastly simplified example: If you are 65 years old and earned $40,000 per year from 1971 to 1983, your Social Security benefits would be about $1,450 per month. But if you earned $20,000 in 2016 and continued to earn that much until age 68, then your benefits would increase to $1,504 per month.
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To run the numbers for your own situation, open a MySocialSecurity account to get your Social Security statement and check your annual earnings record. Then use the online calculator at ssa.gov to estimate the impact of extra earnings. Adjust the "age at retirement" entry near the top of the calculator to cover the extra years you might be working. Input the amount of money you actually earned each year from your Social Security earnings record, then type in the amount of income you could end up having for 2016 and for 2017 and beyond (two separate entries) to see how those extra earnings can affect your benefits.
Compare the benefits you would get under your own earnings record with any potential spousal benefits you could receive. Working a few extra years may not boost your benefits if you are eligible to receive spousal benefits that are much higher than your own benefits, says Tim Steffen, director of financial planning for Robert W. Baird & Co. Your spousal benefit would be 50% of your spouse’s full retirement benefit if you take benefits at full retirement age.
For more information on the Social Security Benefit calculations, see How Much Will I Get from Social Security When I Retire? and our Maximizing Social Security Special Report. Also see Strategies to Boost Social Security benefits.