AARP Online Community and Discussion Forums - How Much Does One Final High-Earning Year Really M...

RickS467730 · ‎07-31-2025

I had planned to start taking my Social Security benefits before my full retirement age in February 2026, but wanted to wait long enough to include two more final paychecks. My 2025 earnings were filed back in January, and I’ll have one last paycheck in late August. Both likely won’t be fully processed and credited by SSA until October or November, with any resulting change to my benefit probably not reflected until December at the earliest.

One of those paychecks could rank among my top 7 earning years, so I thought it might help bump up my benefit. But after reviewing things with my accountant, we concluded that once you start collecting Social Security, any new contributions typically don’t change your benefit much—unless they replace a low year in your 35-year average. And even then, the increase is often modest.

Based on my math, I’d need to live past 78 for the higher delayed benefit to catch up to the total amount I’d receive by starting earlier. So now I’m leaning toward starting payments sooner rather than holding out.

Did I overthink this, or does it sound like the right move? Open to any thoughts or feedback.

Tonster521 · ‎08-02-2025

@RickS467730, you are on the right track. Many folks assume that delaying the start of SS Benefits as a strategy to obtain greater amounts of money is a guaranteed strategy. Although one may obtain a greater monthly amount due to the actuarial adjustment to their Primary Insurance Amount (PIA) after FRA/NRA, the amounts are actuarial equivalents based on average life expectancy (ages 83 to 84) and an approximate 3% discount rate. Second, you need to understand how your PIA is developed. I suggest you carefully review the PIA sections including Average Indexed Monthly Earnings (AIME) at the SSA website. Essentially, the PIA formula uses 35 years of Covered Earnings to develop your AIME. Only Covered Earnings prior to age 60 are indexed for inflation (the SSA definition). So, the Indexed Covered Earnings from years ago (i.e., 1989, 1990, etc.) are significantly greater than your actual Covered Earnings (W2) in the subject year. The Index factors are based on when you attain age 62 (factors stop at age 60). Of course, inflation over the years affects the factors as well. The SSA maintains factors at the website. The point is that you cannot simply compare W2 earnings from 1989 and 2025. At any rate, here is an example of a person who has a net difference in their AIME of $100 (i.e., from $7,391 to $7,491). At the third Bend Point in the PIA formula for 2025 (15% of amounts greater than $7,391), the increase to the PIA is $15.00 at FRA/NRA. Remember, there is an actuarial reduction to the SS Benefit amount if starting earlier than FRA/NRA and an actuarial increase if delaying past FRA/NRA.

Because you did not provide your age, current PIA, future expected PIA, number of months for early start and number of months for delaying after FRA/NRA, if any, it is impossible to determine if your math is accurate.

RickS467730 · ‎08-03-2025

After further review… the call has been overturned.

Thanks to a helpful response in this thread (and some additional offline number-crunching), I’ve decided to go ahead and begin taking my Social Security payments starting in September—just ahead of my full retirement age in February.

I had been considering whether to take one more paycheck this year to slightly increase my benefit, but between the FICA (and employer-side equivalent) tax burden and how little it would realistically move the needle, it just didn’t add up. I realized I’d be paying out thousands now to gain just a few extra dollars a month down the road. That math doesn’t work for me.

Appreciate the community feedback. Sometimes a second look changes the game plan.