Working in Your 70s? Here’s How it Might Impact Your Social Security Checks

Reaching your 70s doesn’t have to mean the end of your career. You may decide to keep working in your 70s because you love your line of work. Or, you may decide to work during your 70s or return to work after retiring because you feel you need the money.

You may be wondering if working in your 70s will hurt your Social Security checks. And here’s some good news in that regard. Not only will having a job in your 70s not reduce your Social Security checks, but it could actually lead to larger benefits.

Higher earnings could boost your monthly checks

You might assume that once you reach a certain age, your Social Security benefits are set in stone. But even if you’ve claimed benefits already, your monthly checks could increase if you continue to work during your 70s.

The Social Security Administration (SSA) calculates your retirement benefit using your highest 35 years of inflation-adjusted earnings. If you worked fewer than 35 years, years with no earnings count as zeros, reducing your average. If you work more than 35 years, only your highest-earning years are included in the calculation.

This means that if you’re still working in your 70s and your current wages are higher than one of the 35 years already on your record, your benefit could increase. Your new earnings would replace one of your lower-income years, raising your average lifetime earnings and potentially resulting in a higher monthly benefit.

Now that increase may not be huge, especially if you’ve already had a long career with consistently high earnings. But for workers whose income has grown significantly over time, replacing earlier lower-paying years can make a big difference.

The SSA reviews earnings records each year. If your latest earnings qualify you for a higher benefit, your monthly payment is generally adjusted automatically. You don’t have to file a separate application to receive the increase.

So let’s say that by age 70, your lowest year of income within your top 35 is $60,000. If you then earn $140,000 for another year, it should knock out your lowest year of income, resulting in larger checks once the SSA redoes its calculation.

There’s no earnings test to worry about

You may have heard that Social Security has an earnings test that applies to people who work and collect benefits at the same time. Exceeding the limit of the earnings test could result in having benefits withheld temporarily.

But that earnings test does not apply to you if you’re in your 70s. Once you reach full retirement age, you can earn any amount of money you want without it having a negative impact on your Social Security checks. At that point, all your wages can do is replace a year of lower earnings, if applicable, and lead to higher benefits.

Plus, continuing to work could help your overall retirement strategy. It could allow you to leave your savings untouched longer, for example, so that money grows.

Just keep in mind that if you earn a generous salary, your Social Security benefits may be subject to taxes. That’s something you need to plan for. But it may also end up being the case even if you don’t work in your 70s and simply have a lot of income between your monthly benefits and retirement plan withdrawals.

Working in your 70s could be a great way to earn money and keep busy. And the good news is that the impact that has on your Social Security benefits should either be positive or neutral — not negative.

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