Jan 20, 2025
Each year, Social Security beneficiaries can receive a bump in their checks thanks to a cost-of-living adjustment. This year’s COLA is 2.5%, which the Social Security Administration (SSA) estimates will boost monthly retirement benefits an average of $49.
But this isn’t the only way Social Security checks can be boosted after claiming retirement benefits. In fact, there’s one additional method that many U.S. retirees may not know about.
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This is particularly relevant to baby boomers, as it involves re-entering the workforce. About 19% of Americans aged 65 and older were employed as of 2023, while workers aged 75-plus were the fastest-growing age group in the workforce, according to research from Pew Research Center.
How can I boost my benefit?
The SSA calculates your retirement benefit partly based on your 35 highest-earning years. But you can still go back to work, even if you’ve already started receiving Social Security checks — and this could bump up your benefit permanently.
If you earn more during a year when you “unretire” than in the 35 highest-earning years prior to your retirement, your benefit may be adjusted to a higher amount.
However, this isn’t quite as simple as it sounds. To determine your primary insurance amount (PIA), the SSA calculates changes in general wage levels as measured by the national average wage index.
But, in general, a year (or more) of higher earnings can replace your lowest earnings years in your 35-year earnings history, so you could potentially see your benefit go up. To take advantage of this, you may need to find a job where your experience and seniority could net you a higher salary.
It could be harder to move the needle if you’re taking on part-time or gig work to bring in a bit of extra cash to supplement your retirement savings.
However, going back to work could be particularly beneficial for anyone who hasn’t completed 35 years of work. When calculating your PIA, any year you didn’t work (out of 35 years) would count as a “zero,” which brings down your overall average.
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Is there a catch?
Some retirees discover they can’t afford the lifestyle they’re accustomed to and may decide to go back to work anyway, even if they’re already collecting their Social Security retirement benefit. This can bring in some extra income, while potentially boosting their future retirement benefit — though it may temporarily reduce it.
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So, for example, if you’re younger than your full retirement age (FRA) and already collecting your Social Security retirement benefit, you’re subject to an annual earnings limit. For 2025, that limit is $23,400.
If you make more than that, the SSA will deduct $1 in benefits for every $2 you earn above the limit. In the year you reach your FRA, the SSA will deduct $1 from every $3 you earn above a certain amount — $62,160 if you reach FRA in 2025. Starting with the month you reach your FRA, your benefits won’t be reduced — no matter how much you earn. If any benefits are withheld, you may also receive credit toward a benefit increase after FRA.
Of course, going back to work isn’t a viable option for everyone. For some, health issues could prevent them from working, at least full time. Others may not want to go back to a job if it requires heavy physical exertion.
There’s also the issue of age perception in the workforce, with nearly two-thirds (64%) of workers 50-plus saying they’ve seen or experienced age discrimination in the workplace, according to an AARP survey.
While re-entering the workforce comes with a few challenges, some Americans may decide to do so for reasons other than money. Maybe they’re bored in retirement or lack a sense of purpose, so they want to go back to work — and getting a bump in their benefit check is just an additional perk.
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Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
