Will my Social Security benefit grow even if I don’t work?

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Q. If your full retirement age is 66 in 2020 and you don’t work again after you reach this age, do you still receive the 8% per year increase in Social Security if you hold off receiving your benefits until you reach 70 years old?
— Figuring it out

A. We’re glad you’re asking before you start taking benefits.

Social Security determines your benefit amount based on your lifetime earnings. 

The agency adjusts or “indexes” your actual earnings to account for changes in average wages since the year the earnings were received.

Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most, the agency said.

“We apply a formula to these earnings and arrive at your basic benefit, or `primary insurance amount.’ This is how much you would receive at your full retirement age — 65 or older, depending on your date of birth,” it said.

For every year beyond your full retirement age, if you don’t start taking benefits, you would get an 8% increase in benefits until you reached age 70, and the increase is not dependent on you continuing to work, said Bill Connington of Connington Wealth Management in Paramus.

Once you reach age 70, the benefits would stop growing, he said.

“If you continue to work and pay Social Security payroll taxes from age 66 to 70, your monthly benefit at age 70 would be even greater then the 8% increase,” Connington said.

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This story was originally published on Jan. 12, 2021.

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