Larry, I am at full retirement age and drawing SS while working full time. However I'm making more money now than the last 35 years. I am making about $5,000 more per year. When Social Security recalculates my earnings of that $5,000 more last year can you tell me about what formula they use so I can get an idea of how much that will increase my monthly benefit. Thank you.

Hi,

Social Security's retirement benefit formula is much too complex for me to summarize for you here. Social Security provides a general explanation of how retirement benefits are computed in the following publication: https://www.ssa.gov/pubs/EN-05-10070.pdf. You'd have to view their operations manual for the detailed formula: https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605010.

How much your benefit rate might increase from your current and future higher earnings depends on a number of different factors. Earning $5,000 more than you did in past years wouldn't necessarily increase your rate at all, because your Social Security retirement benefit rate is calculated base on your highest 35 years of Social Security covered wage-indexed earnings. Wage-indexing normally results in a person being credited with more than the amount that they actually earned in the years prior to the year they reached age 60 when calculating their benefit rate. Therefore, even though your actual current earnings are higher than your past earnings, they may not be higher than the indexed amount you were credited with when calculating your current benefit rate.

Our software (https://maximizemysocialsecurity.com/purchase) uses the same formula as does Social Security to compute benefit rates and it allows you to plug in projected current and future earnings, so you may want to consider using the software to do your benefit calculations.

Best, Jerry