Why Hasn’t My Social Security Benefit Increased Despite the Fact That I’m Working?

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In July, I will turn 72. I began collecting Social Security at the age of 64 due to a job loss and other unforeseen circumstances. Thus, my plan to work past the age of 68 was abandoned, but I have continued to work at a significantly reduced rate since that time. I’ve contacted Social Security to request an increase in my “entitlement,” as my recent earnings are significantly higher than my first few years of earnings. My monthly increase would be approximately $500 if I used the formula of my highest earnings over the last 35 years divided by 420. I’ve contacted Social Security about this several times. Their standard response is that they evaluate all accounts in October and make any necessary adjustments in March of the following year. There has been no change in this regard as I have continued to work. Does the fact that I applied for benefits at the age of 64 eliminate me from consideration? Signed: Still Working at the Age of 72

 

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Respected Employees: The Social Security representatives you spoke with were correct – they examine your recent earnings each year and adjust your benefit automatically if necessary. However, the dollar amounts they consider when determining whether you should receive a benefit increase may not be what you believe.

 

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When you applied for Social Security benefits at age 64, they calculated your benefit based on the 35 years with the highest earnings, but they “indexed” those earnings (adjusted them for inflation) for the years you turned 60 and earlier. That is, they increased your historical earnings by an inflation percentage for each year to arrive at your age 64 benefit in current dollars. For instance, if you earned $25,000 in 1985, that equates to approximately $62,000 in today’s dollars, which is the amount they used to calculate your benefit. However, that is also the amount you would need to earn today to increase your monthly benefit amount.

Therefore, unless your recent earnings exceed the inflated dollar amounts used to calculate your benefit at age 64, your monthly benefit will remain unchanged. Keep in mind that Social Security only considers the 35 years of your life during which you earned the most, which means that years with lower earnings (for example, when you first started working) are likely excluded from the calculation.

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In any case, rest assured that filing for benefits at age 64 does not preclude you from receiving a larger benefit if your current earnings exceed the inflation-adjusted amounts originally used. Every person who works and earns, regardless of whether they are already receiving Social Security, will have their earnings history reviewed annually to determine whether their current earnings qualify them for a larger benefit. If this is the case, it is automatically granted.

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