A friend of 1poorlady is 69. She’s still working, and -to my knowledge- not taking SS yet. She believes she is continuing to accrue SS benefits, which I believe is correct (she isn’t a high earner, so won’t hit the cap of something like $5500(?)). When she does start taking SS, I believe the payment will be frozen at that moment, no matter how much longer she works. Correct?
Maybe. Social Security takes into account your 35 highest income years, with years before age 60 (or so) adjusted for changes in the wage index over time. If her income is high enough, she is still increasing her benefits by working. If it is not, then she’s paying the tax without getting additional benefits from it.
That said, at 69, she is still increasing her monthly payment amount by choosing to not collect Social Security yet, but that benefit stops improving once she hits 70.
Any future earned income — up to the annual salary maximum — will still count towards her benefits, as long as she has no- or low-enough-income years from her salary record for those earnings to override.
Also, as she is above her full retirement age, she can collect benefits at any time, regardless of whether she keeps working. While those benefits will likely face income taxes if she keeps working, they will not be subject to the earnings penalty. That penalty only applies to those who are below their full retirement ages while collecting Social Security.
Regards,
-Chuck
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She will get annual cost of living adjustments. No not frozen but adjustments are usually only a few percent.
How many years of work does she have on her SS record? If it’s less than 35, then, yes, any income she earns from work will increase her SS benefit based on her record. If she has at least 35 years of income from work recorded in her SS record, then it depends on whether, after inflation adjustments, her monthly income from this year will be more than her AIME (Average Indexed Monthly Earnings) over those 35 years. If so, then her benefit will be increased because of her work this year.
That said - has she ever been married, and, if so, was it for longer at least 10 years? If so, and the SS benefit from her work record is less than 50% of her (former/current/ex) spouse’s benefit, then she’s only decreasing the top-off that she will get. She should probably claim this benefit now, because it’s not going to increase any more, no matter if she continues to work or not.
And if her (former/ex) spouse has predeceased her, she would get 100% of his benefit. If his benefit is more than her benefit, she should claim this benefit now, because it’s not going to increase any more no matter how much she works.
In fact, in both of those claiming scenarios, since she’s older than her FRA, she should probably make a claim for 6 months of retroactive benefits.
Well, there are COLA adjustments, so it’s not ‘frozen’. And if she is still working, if what she is earning is more than her AIME, then her benefit could still increase even after she has claimed - although the increase probably won’t be significant, but when the benefits are recalculated for COLA each year, she will probably get a little more than she would have with just the COLA adjustment.
And, back to the scenario of if she was married for more than 10 years: If her (former/current/ex) spouse is still alive, when he dies, she would be eligible to claim 100% of his benefit if it’s higher than hers.
I will also point out that there is no reason for her to delay claiming past her 70th birthday, as she will just be losing those monthly benefits.
AJ
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