Social Security

[Rnininger]

I currently receive social security (I'm 74 tears old). I'm still working. My social security is based on my highest years income over my working life. Some of those years I'd showed no income. My income now is higher than many of the years used to calculate my benefit. Should this new income be used to calculate a higher benefit?

[MarionH]

The Social Security Administration (SSA) automatically reviews your earnings record each year to determine if your new earnings could increase your monthly Social Security benefit. If your earnings from working at age 74 are among your 35 highest-earning years, the SSA will recalculate your benefit amount and increase it accordingly. This adjustment is automatic and does not require any action on your part.

Taxation of Social Security Benefits While Working

Since you are working while receiving Social Security, there is a possibility that a portion of your benefits could be taxed, depending on your combined income. The IRS defines combined income as the sum of:

1. Your adjusted gross income (AGI),
2. Non-taxable interest, and
3. Half of your Social Security benefits.

For the 2025 tax year, the following thresholds apply:

• Individual Filers:

  • If your combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable.
  • If your combined income is above $34,000, up to 85% of your benefits may be taxable.

• Married Couples Filing Jointly:

  • If your combined income is between $32,000 and $44,000, up to 50% of your benefits may be taxable.
  • If your combined income is above $44,000, up to 85% of your benefits may be taxable.

It’s important to note that no more than 85% of your benefits will ever be subject to taxation.

By continuing to work, you not only have the potential for increasing your future monthly Social Security benefit, but you should also monitor your income levels because they may affect how much of your benefits will be taxable.

@Rnininger 

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[Opus 17]

Short answer: yes.  However the calculation is inflation-adjusted.  So $50K of salary in 2024 will not necessarily replace $25K of salary from 1984.  But if you have zeroes in your top 35 earning years, your current earnings should replace one of those zeroes and result in a benefit recalculation.  Contact the SS administration for more details about your benefits. 

[K M W]

The amount of Social Security retirement benefits is based on Lifetime earnings and your age at retirement.

Regarding lifetime earnings, the highest 35 years are used to calculate average monthly earnings. Each year is indexed for inflation to approximate what earnings for that year would be in today’s dollars. There is also a maximum amount of earnings each year that are subject to Social Security tax for that year.

• If you have worked for fewer than 35 years, the Social Security Administration (SSA) fills in the missing years with zeros, which significantly lowers your average benefit.

• If you have worked for 35 or more years, the SSA uses your actual highest-earning years.

The Social Security Administration will calculate the impact your current income has on your social security benefits. This process happens automatically every year that you have new earnings reported.  You should receive a letter from the Social Security Administration and possibly retroactive benefit owed once the Social Security Administration has processed your tax records.

The Social Security Administration website has a wealth of information regarding benefits, so I would encourage you to take a look at information there if you wanted more details. You can find their website at SSA Website