Ask Stacy: Will a Lower-Paying Job Before Retirement Hurt My Social Security?

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You’ve worked for decades. Now it’s finally nearly time to kick back and start tapping Social Security. But don’t stumble at the finish line.

Here’s this week’s question:

My husband has been working on his job for almost 30 years and is eligible to retire and draw his retirement from them. He will be 58 years and eight months old at time of retirement.

He is planning to get another job to work until he can draw his Social Security. So the question is: If he gets a job making less money than his current job, how will that affect the amount of Social Security payments he’ll get when he is old enough to get it? Is there something he needs to do so that his amount of payments from the Social Security will not be smaller payments?

Thank you so very much. I always look forward to your emails and learn a lot from them. – Sandra

Sandra is afraid that by taking a lower-paying job, her husband may receive lower Social Security payments when he retires. That’s a logical fear, but actually the reverse may be true. If he hasn’t yet worked 35 years, his Social Security payments will be higher as a result of his new job.

Here are seven things about Social Security everyone should know:

1. Work at least 35 years

Social Security benefits are calculated based on your 35 highest-earning working years. If you work fewer years, you’ll have years with zero income averaged in – which will lower your payout.

2. Make as much as you can

If you experience a jump in salary, you’ll likely boost your future earning potential and may see an increase in your Social Security payments down the road because, as we just explained, Social Security takes into account the 35 top-earning years of your career.

3. Wait until full retirement age to claim Social Security

You can begin collecting Social Security benefits as early as age 62, but you might not want to: Your benefit will be reduced by 25 percent for life. To get your full payment, wait until you reach full retirement age – 66 for anyone born between 1943 and 1954. For those born between 1955 and 1959, the age gradually rises toward 67. For those born in 1960, it’s 67.

4. Better yet: Wait until age 70

If a part-time job will provide enough income to allow you to wait until age 70 to claim Social Security benefits, it’ll pay off.

Thanks to what the Social Security Administration calls “delayed retirement credits,” benefits increase 8 percent each year you delay tapping into Social Security – up until age 70. So waiting until you reach 70 means about a third more income per month.

For those who consider this strategy, it’s particularly beneficial for the higher-earning spouse in a marriage to hold out until age 70 to increase the total benefits the couple will receive. In the event that the spouse with the higher benefit passes away, the surviving spouse will receive a higher survivor benefit.

If you took benefits early and regret the move, it might not be too late to fix it. You may be able to repay all the benefits you received so far and restart them at a higher level based on your age. But this policy isn’t as flexible as it used to be. For more details, check out this page on the SSA site.

5. Use online tools

If you’re unsure about the best time to claim benefits based on your individual budget, health, life expectancy or other factors, use online resources to help you decide. A good place to start is, where you’ll get your personalized statement. This estimates what your benefits will be at age 62, at full retirement age, and at age 70.

Once you get estimates for both you and, if applicable, your spouse, there are other online tools that compare your benefits under various scenarios to help you determine the best claiming strategy. Consider AARP’s Social Security Benefits Calculator or Analyze Now’s Strategic Social Security Planner.

6. Taking early retirement? Beware outside income

If you start taking benefits before reaching your full retirement age, employment elsewhere can reduce your Social Security checks.

For example, say you started taking Social Security in 2012 at age 62 and your full retirement age is 66. For 2012, your benefit would be reduced by $1 for every $2 you earned in gross wages or net self-employment income above $14,640.

If 2012 was the year you reached full retirement age, you could have earned up to $38,880 prior to the month you turned 66. More than that and your benefit would be reduced by $1 for every $3 you earned.

After you reach full retirement age, you get your full benefit no matter how much you earn.

7. Do your due diligence

Always read your Social Security statements (either received as paper statements in the mail or online at to be sure everything has been reported correctly. Although inaccuracies are uncommon, some scenarios lend themselves to a greater chance of error – such as a name change your employer failed to update on company records.

Got a money-related question you’d like answered?

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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

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This article was originally published on as 'Ask Stacy: Will a Lower-Paying Job Before Retirement Hurt My Social Security?'.

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