Ask an Advisor: I Kept Working After Claiming Social Security. Will a Recent Raise Increase My Benefits?

Financial advisor and columnist Brandon Renfro

I’m 69 and began to collect Social Security when I hit my full retirement age in April 2021, but I’m still working fulltime and making a good income. My salary is 2.5 times what I was making four years ago. Social Security has annually adjusted my monthly check every April based on my increased earnings over the past three years. However, they failed to make the adjustment this year, even though my income remains at its highest ever.

I called Social Security twice and was told “the adjustments are calculated twice a year – in March and October – wait until you receive a notice in October as to whether you will get an adjustment to your earnings benefit.” I’m worried this is a complete oversight by Social Security based on my history. I’m wondering what my next steps would be should Social Security fail to readjust and reconfigure my earnings benefit.

-Kathleen

While I won't tell you that interacting with the Social Security Administration is going to be a fun or enjoyable process, I don't think you have cause to be worried yet. If the update doesn't happen in October, you can contact them to have your earnings record corrected. I don't think you necessarily have an issue at this point. However, it is worth reviewing how continuing to work fulltime can impact your Social Security benefits. (And if you need help planning for Social Security or creating a plan for retirement, connect with a fiduciary financial advisor.)

Working After Filing for Social Security Benefits

If someone continues to work and earn a higher salary after they start to collect Social Security, as you have, their benefit will continue to increase.

Your benefit is based in part on your highest 35 years of earnings, regardless of whether those years happened before or after you began collecting your payments. If you are making more now than you did in any of your 35 previous highest working years, then your new salary replaces a lower one in the formula and your benefit will go up.

Your Earnings Record

Continuing to work after starting to collect Social Security can increase your benefit.

Your earnings record is a history of your income that’s subject to Social Security taxes. It’s also what your benefit is based on. You can find your own earnings record online by logging into your profile on the SSA’s website.

The SSA updates your earnings record with new earnings information each year as it becomes available. Because this information comes in at irregular intervals, your earnings history isn't updated on any specific calendar date.

One potential "issue" that may have prevented your benefit from updating in April is that your record may not reflect your previous earnings yet. You can check that through the portal I mentioned. If you still see a "$0" listed, that’s the culprit. You can check back in periodically to see if the update has been posted. (And if you need help deciding when to claim Social Security or maximize your payments, speak with a financial advisor.)

Correcting Your Earnings Record

A woman calls the Social Security Administration about her benefit.

Of course, the information in your record isn't always accurate. If your recent earnings are there already, make sure they are correct. If the reported amount is less than your actual earnings, your benefit won't be as high as it should be. This is one potential reason you didn't receive the update. If the amount shown as your most recently reported earnings isn't one of your highest 35 years then it wouldn't create an increase.

Either way, if your earnings record isn't accurate you should have it corrected by contacting the SSA and letting them know that's what you'd like to do. It's a good idea to have income documentation on hand when you make that call.

While I'm sure you'd rather receive the money now, rest assured you haven't lost it forever. When benefits are updated to reflect new earnings, your new benefit amount is adjusted retroactively. As a result, you'll receive the value of any missed payments. (But if you need additional help with matters concerning Social Security or your other sources of retirement income, connect with a financial advisor and see what they can do for you.)

Bottom Line

I suggest you start by verifying that your earnings record is accurate and up to date. If not, wait until your latest earnings are reported or call the Social Security Administration to make a correction. If you don't receive the notice in October like you were told you would, and your earnings record is correct, then I would suggest contacting them again. Sometimes a little persistence coupled with patience is all you need.

Tips for Managing Social Security

• Just because you paid into Social Security throughout your career doesn’t mean your benefits will count as tax-free income. Depending on what’s known as your “combined income,” up to 85% of your Social Security benefits may be taxable. It’s important to understand how your benefits can impact your income tax liability.
• A financial advisor can help you plan for and manage your Social Security income. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.

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