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Ask Bob: Will a Few Months Without Work Impact My Social Security Benefits?

After 40+ years of work, a reader plans to retire a few months before he starts Social Security and wants to know if that will have a negative impact on his monthly benefits.

Question

I have been working for over 41 years paying into Social Security, income fairly consistent, with the past 14 years being the highest. My date of birth is December 25, 1954.

I would like to stop working in August of this year, 2022, so my earnings for the year would be about 60% of a normal year. However, I was planning to wait to file for Social Security until January 2023 when I'll be 68.

Will those 4+ months of not working have any significant effect on my monthly Social Security benefit, more than a $100 dollar reduction per month?

Answer

"Congratulations on your pending retirement," says Bob Rall, CFP®, CEO and founder of Rall Capital Management. “Your Social Security benefit will be based upon your average wages over the highest-earning 35 years of your career,” he explains.” Continuing to work will increase your benefit slightly, but four to five months of no income on a career that spanned 41 years will not be significant.”

Rall notes, “Another thing to consider…because you were born in 1954 (on Christmas Day no less!), Social Security considers your full retirement age to be 66. Since you have not claimed benefits yet, you are receiving delayed retirement credits equal to 2/3 of 1% per month.” Adding, “Your benefit may be a bit lower if you stop working in August but it will still be increasing each month you wait to begin your benefit.”

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Email Robert.Powell@maven.io

Question

I have been working for over 41 years paying into Social Security, income fairly consistent, with the past 14 years being the highest. My date of birth is December 25, 1954.

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