What will happen to my Social Security benefits?
If I have been retired for 6 years, but go back to work full-time as an employee, will my earned income increase my Social Security benefit amount?
Maybe, if your new income is high enough, or you had many missing working years in the past. The social security administration looks up the highest average of 35 years of your employment. Thus, if you took an early break and now returned to the work force, every bit of new earnings will be reviewed and re-calculated into your new social security benefits once you claim it again later.
There’s an additional benefit should you newly calculated social security benefits increase. Your spouse may get a bigger spousal benefit while you are alive, or a larger survivor benefit should you decease. Either way, working extra few years may really improve your odds for retirement readiness. Best!
Your Social Security benefit is based on your highest 35 years of earnings. If you go back to work and replace some of your lower-earning years with higher-earning years, your benefit could increase. For example, if you only worked for 30 years, then your benefit calculation would have 5 years where you earned $0, so working more should increase your benefit. But, if you don't make more now than your 35th highest-earning year, it shouldn't change your benefits.
Joe Allaria, CFP®