Social security: how a gradual career break could get you more benefits

Social security: how a gradual career break could get you more benefits

(Maurie Backmann)

Retirement is a milestone that many people look forward to. And some people are so eager to get there that they’re ready to turn their lives upside down by going from a full-time weekly work schedule of 40 hours or more to not working for even a minute.

This so-called crash, however, can have financial and emotional consequences. For the former, this may mean having to adjust expenses and budget again overnight. For the latter, it can mean finding themselves not knowing how to stay busy.

That’s why you’ll often hear that a career break is a better bet. With a career break, you don’t go from full-time to none in the blink of an eye. Instead, you slowly work your way into retirement by reducing your hours until you’re ready to enjoy it to the fullest.

Image source: Getty Images.

A career break could make it easier for you to adjust to retirement. And it could also result in an increase in Social Security pay.

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A good way to end up with higher benefits

Ideally, you’ll start your retirement with a decent amount of money in an IRA or 401(k) plan — a plan you can withdraw from regularly during your senior years. But Social Security could still end up being a major source of income for you — and a more consistent source, too.

The amount of money you can take out of your retirement nest egg may depend on how well your investments perform. But once you’ve locked in a monthly Social Security benefit, that’s the amount you can generally expect for life.

This is another reason to consider a career break. Let’s say you are entitled to your full monthly Social Security benefit at age 67, and so you decide on that age for retirement. If you quit your job cold, you may need to claim benefits immediately to cover your bills.

What if instead you had to reduce to 25 or 20 hours of work per week? That could leave you with enough pay to handle your bills without claiming Social Security. This, in turn, could give you the option of delaying your deposit and getting a higher monthly benefit in return. (You can delay applying for the boost until age 70.)

Also, your monthly Social Security benefit will depend on your 35 highest earning years. But if you don’t work for 35 years, $0 will be counted for each year without income.

So let’s say you reach your target retirement age and only have 34 years of work under your belt. If you work part-time for another year, you can replace $0 with a certain amount of income. The result? A higher monthly benefit throughout retirement.

It pays to take things slow

If you’ve worked your whole life, you may be looking forward to ending your career. But before you go ahead with that hard stop, consider the merits of easing. You may find that it not only benefits you from a social security perspective, but it makes the transition to retirement easier overall.

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