I am age 65, and plan to continue working until age 70. I was told that if I begin taking my social security next year at FRA, my benefit will continue to rise based on my $175,000 per year salary from age 66-70 so that my age 70 benefit will actually be higher than if I defer taking any benefit to age 70. Is this correct? Seems to good to be true. Thank you.

Hi,

Well, if you continue to work and earn $175K per year until age 70, your benefit amount will rise, but you won't receive delayed retirement credits (DRC) if you start drawing your own benefits at full retirement age (FRA).

Social Security retirement benefits are based on a person's best 35 years of inflation adjusted earnings. Your benefit rate is recalculated after every year in which you have earnings higher than one of your previous best 35 years. Naturally, if you earn $175K for another 5 or 6 years, those will replace the lowest years currently in your highest 35, causing your 35 year average and your benefit rate to increase.

The recalculation to credit higher years of earnings will happen regardless of when you start drawing your benefits. If you also defer starting your benefits until age 70, however, your benefit rate will be 32% higher than if you start drawing at FRA. This is due to the 8% annual DRC increase you receive starting at FRA, but only if you defer taking benefits. If you instead choose to start drawing benefits at FRA, you'll still get the increases resulting from your continued earnings, but not the potential 32% increase from DRCs.

You may want to consider running the maximization software available on this website to make sure that you choose the best filing strategy.

Best, Jerry