Social Security Hit if I End Work 3 Years Early?

Dear Dr. Don, If I stop working at 63 but delay applying for Social Security benefits until my full retirement age at 66, how much less will my benefit be because I will not be working the last three years before applying for benefits? My husband is three years younger than I, so I cannot apply for his Social Security because he'll be working until he reaches his full retirement age at 66. Thanks. -- Linda Leisure

Dear Linda You are correct in saying that you can't receive a spousal benefit until your spouse files for benefits. As you're older than your husband, you could start receiving Social Security benefits on your own work record at your full retirement age and later may be able to earn a spousal benefit in addition to your own retirement benefit when he reaches his full retirement age.

If you are eligible for both your own retirement benefit and for benefits as a spouse, Social Security will always pay benefits based on your work record first. If your possible benefit as a spouse is higher than your own retirement benefit, you will receive a combination of benefits equal to the higher spousal benefit.

The benefit calculation based on your work record uses the highest 35 years of Social Security-reported earnings after age 21. Earnings are indexed based on the national average wage index. It's common for a person's highest annual earnings to occur at the end of the working career.

By retiring three years before your full retirement age, you will be putting up zeros in those years. If you continue working instead and post earnings that make your top 35 years, those earnings would increase the Social Security benefit you'll receive based on your work record.

How much does it cost you in benefits to not work the three years prior to your full retirement age? I can't tell you because I don't have your earnings history, but the Social Security Administration has a few different ways for you to estimate the difference in benefits: using the agency's Retirement Estimator, its Quick Calculator or its Online Calculator. Visit and search "estimate benefits" to see your options.

The Retirement Estimator will use your earnings history without you having to input it, but you'll have to create different retirement scenarios to see the difference in benefits. The Quick Calculator guesstimates your past earnings history based on your most recent earnings, but you have the ability to input your actual earnings history. The Online Calculator requires that you input your earnings history to estimate your benefits.

From these calculators you'll be able to estimate the difference in monthly benefits if you decide not to work the last three years prior to your full retirement age.

A final caveat is that I assumed you would not be affected by what's called the "Windfall Elimination Provision." It reduces Social Security benefits for employees who receive pensions that are based on earnings not covered by Social Security.

Thanks to Edward Lafferty, a public affairs specialist at the Social Security Administration, for helping me with this reply.

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