The U.S. Added Just 29,000 Jobs in September. Leaving Work at 63 Could Leave Weaker Years in His Social Security Calculation
Losing a job at 63 looks like the end of the road, but the bigger financial hit may come from a decision most people make too quickly, without ever checking the one document that could change everything.
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The job market isn’t offering much encouragement to Americans looking for work. U.S. employers added just 29,000 jobs in September, down from 133,000 in August, according to the Bureau of Labor Statistics’ October 2 report. The agency also revised its July and August figures down by a combined 60,000 jobs. For someone who loses a job late in his career, starting over can suddenly look like a gamble.
Picture a 63-year-old operations manager with decades of steady work behind him. His position is eliminated. He thinks about months of interviews, a likely pay cut and a few more years of commuting, and decides that rebuilding his career isn’t worth it. He has savings, and he’s ready to be done.
Plenty of people in their early 60s end up in this spot, and it comes down to two separate decisions: when to stop working and when to start Social Security. The first one carries a cost that rarely comes up, and the second one gets made too quickly.
Why His Last Working Years Could Still Raise His Check
Social Security bases retirement benefits on a worker’s 35 highest years of covered earnings. Older wages are indexed, which means they are adjusted upward to reflect how wages have grown over time. His final working years can still make the top 35, potentially replacing lower-earning years from earlier in his career.
Stopping work at 63 could cost him the chance to improve his record. Maybe it includes lean years from his early 20s, a stretch of part-time work or years with no covered earnings at all. Another strong earning year could replace one of those weaker years, raising his future check. If he never works again, he loses that opportunity.
People who started their careers late, stepped away to care for family or were self-employed with low reported income are the most likely to have these gaps.
One Lost Year, Shown in Dollars
Say he had planned one more year earning $80,000 in covered wages. That year would have replaced a $20,000 indexed year in his top 35, which raises his 35-year total by $60,000.
Social Security spreads that total across all the months in those 35 years to get his average monthly earnings, which is the starting point for his benefit. Here, the $60,000 improvement lifts that average by about $143 a month before the benefit formula is applied.
That $143 goes into the formula, and his actual check would rise by less. The formula replaces a bigger share of earnings for lower earners, so how much of the gain shows up in his check depends on where his lifetime average falls. Whatever the increase turns out to be, it lasts for life and rises with each inflation adjustment. If his top 35 years are already full of strong earnings, one more year may change very little.
Quitting Work Doesn’t Mean Claiming Right Away
He can leave his job at 63 and still wait to claim, as long as his savings can cover the gap. The Social Security Administration sets full retirement age (FRA) at 67 for anyone born in 1960 or later. Claiming at 63 generally cuts the unreduced benefit by 25%, and that cut never goes away.
A tough job market may convince him to retire, but it doesn’t have to determine when he claims Social Security. That decision is still his to make. Locking in a smaller check for life because of one month’s hiring data is the hardest version of this mistake to undo.
Living off savings for a few years while his benefit grows can be a reasonable trade, especially if he expects to live a long time or has a spouse who might one day depend on survivor benefits based on his record.
Check His Earnings Record Before Picking a Claiming Age
His first step is to check his Social Security record online and download his earnings history. He should count the years that show zero or unusually low earnings. If his top 35 years are already strong, he can stop working knowing his benefit has little room left to grow. If there are gaps, a year or two of consulting or part-time work that pays into Social Security could fill some of them.
Then he should set that record next to his savings runway, meaning how many years his cash and retirement accounts can support him before he needs a monthly check. Together, those two figures should decide his claiming age. A pension, a spouse’s benefit or a single missing year can change the answer, so the numbers on his own statement are the ones that should drive the decision.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
