Pausing Your Social Security Benefits Has This Unexpected Effect On Your Finances

For anyone already drawing Social Security benefits, there's good news. Even though it might seem as if starting to take your benefits locks you into stringent rules and budgetary math, you can actually still affect the bottom line well after you start drawing checks. One option on the table is the pause — pausing your benefits can change the calculation dramatically, and for a key few reasons. It's a move worth exploring for anyone who feels they need to build just a bit more retirement income to meet their lifestyle goals, and is a step that can be taken after making the leap into retirement.

The Social Security Administration estimated that back in 2014, monthly Social Security checks accounted for around 49% of the total family income of individuals aged 65 years and older, and that this number rose to 84% for those in the bottom 40% on the scale of wealth. Gallup polling from April 2024, meanwhile, showed that 35% of non-retired adults expect their Social Security benefits to be a major source of income (with a gentle upward trend since 2001). Given these numbers, a robust benefit amount is, for many, a key component in a happy and financially stable retirement.

With the average Social Security monthly check coming out to about $1,920 (as of August 2024), planning for your own retirement future can be made a little clearer with an understanding of your own benefit calculations, as well as some strategies that may be available to you that can help to maximize these figures, even after leaving the workforce. (Here, by the way, is the average Social Security benefit for a retired worker by age.)

Social Security benefits are calculated based on your 35 highest-earning years. For many workers, 35 yearly contributions will take place before you turn 60. For others, though, a delay to the start of your primary working years — as a result of medical needs, perhaps a lengthy education, or multiple years affected by layoffs — can result in a few lackluster yearly figures being added into the mix. You may even have a year or two counted as a zero.

If you've already started drawing your Social Security checks, you may want to consider reviewing your record to identify the figures used in your benefit calculation. If you have a year or two counted from the period when you were working a low-paying or temporary job (perhaps as a teen), or your years of education or outage have resulted in one or more zeros, returning to the workforce might be a great option. Pausing your benefits and then taking on a job to convert a low figure into a higher one can do wonders to your payout rate.

This is especially true for benefit recipients who have a zero year on their tax record. In such cases, taking on any kind of work will change this calculation and dramatically increase your overall Social Security benefit average. You don't have to get back into a role similar to the one you left. Taking on a part-time job for a year that brings little to no stress into your life is all it takes in some instances. This said, there are timing rules when it comes to pausing your benefits.

Pausing your benefits is a little-known rule that can increase your monthly Social Security checks, but as said, the timing has to be right. If you started taking benefits early and haven't been receiving checks for 12 months, you can pay back the benefit amount you've received (a possible drawback for some) and start the clock over all again on your Social Security benefit rate. This do-over can only be used once, but it might be worthwhile for those hoping to improve their payout figure.

You can, however, also pause your benefits after you reach full retirement age (66 or 67 depending on your birth year). In this case, you'll request Social Security to suspend your payments. As with the one-time do-over before you reach full retirement age, this lets you add to your benefit amount. Not by taking on a part-time job, though, but by receiving a delayed retirement credit. For each year after reaching full retirement age that you delay collecting Social Security, you'll receive an 8% increase, up to age 70 (when the credit maxes out).

According to the Social Security Administration's Annual Statistical Supplement (2024), delaying Social Security until age 70 would result in an estimated $535 more each month ($2,924.27 versus $2,386.60). A drawback here, however, is that pausing your benefits also impacts your family.

Social Security benefits don't just come into play for individual retired workers, but also for their families. When you pause/suspend your Social Security, one drawback is that the benefits also stop for anyone who receives a benefit based on your work record.

Those married at least 10 years can utilize their spousal benefit instead of their own payout rate, a feature that's mighty handy for couples who make notably different salaries throughout their working years. But spousal benefits, and, as said, any benefits that might be paid out to your dependents, are also paused/suspended if you opt to take a breather on receiving your own Social Security payments. Note that an exception to this applies to ex-spouses who were married for 10 years or more (here's more on what happens to your Social Security benefits after getting divorced).

With this said, if you're concerned about the survivor benefit value you might leave behind, then pausing your Social Security checks can be a potentially valuable decision. Continuing to work not only allows you to boost the total benefit you receive in monthly checks, but it can also add to the baseline value of the benefit you may ultimately leave behind for your loved ones.