These 3 Assumptions Raise or Lower Social Security Benefits, Says Kevin Lum
Do you know your true Social Security estimate?
In his video, “Your Social Security Statement Is Hiding Something,” Kevin Lum, founder of Foundry Financial and a certified financial planner, recounted a prospective client who had circled $3,500 on her Social Security Statement. It was her estimated monthly benefit at age 70, and she assumed she could count on it.
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Lum told her that expectation was more of a maybe.
“That number isn’t a promise,” he said. The estimate assumes how much you will earn, how long you will work and whether you will continue working after claiming. If your plans differ, the amount you qualify for or initially receive could change.
Here are three assumptions to check before building your retirement budget around that estimate.
You’ll Keep Earning the Projected Amount
According to the Social Security Administration, your statement uses a stated annual earnings amount to project your retirement benefits. The amount appears below the estimates.
If your income changes, the projection could change with it. An estimate based on $100,000 in annual earnings may be too high if you move to part-time work. It could be too low if your earnings increase.
Social Security calculates your benefit using your 35 highest-earning years, adjusted for wage growth. Lum said people with gaps or low-earning years should pay especially close attention. If you already have 35 strong years, earning less may barely change the estimate. Otherwise, the estimate may be counting on future paychecks to fill zeros or replace lower-earning years.
Compare the earnings amount beneath your estimate with what you plan to earn. Then check your record for zeros or unusually low years.
You’ll Work and Wait Until the Claiming Age Shown
The age-70 estimate assumes you will keep working until 70 and wait until 70 to claim. But those decisions do not have to happen at the same time. You can stop working earlier and still wait until 70 to collect Social Security.
According to the Social Security Administration, full retirement age is 67 for anyone born in 1960 or later. Compared with claiming at 67, claiming at 62 reduces the monthly benefit by 30%, while waiting until 70 increases it by 24%.
Those delayed retirement credits come from waiting to claim, not from continuing to work. Stopping work would change the age-70 estimate only if the missing earnings affect the 35-year calculation said above.
“The thing you want to do is separate those two questions: When do I stop working? And separately, when do I want to claim?” Lum said in the video.
You Stop Working Once You Start Claiming Benefits
If you claim before full retirement age and keep working, Social Security may withhold some of your benefits once your earnings pass the annual limit. The monthly estimate from the Social Security Statement does not account for this possibility.
According to the Social Security Administration, someone who remains below full retirement age throughout 2026 can earn up to $24,480 before the retirement earnings test applies. Social Security withholds $1 in benefits for every $2 earned above that limit.
Lum used the example of someone who claims at 64 and earns $50,000. That puts the worker $25,520 over the limit, so Social Security could withhold about $12,760 in benefits that year.
Only income from work counts toward the limit, including wages and net self-employment income. Pensions, annuities, interest and investment income do not.
According to the Social Security Administration, a higher earnings limit applies during the calendar year you reach your full retirement age, which varies by birth year. In 2026, that limit is $65,160, with $1 in benefits withheld for every $3 earned above it before the month you reach FRA. Beginning with that month, the earnings test ends.
“The withheld money, it’s not gone,” Lum said. Once you reach full retirement age, Social Security gives you credit for the months it withheld payments by raising your future checks.
Check the Estimate Against Your Plans
Before relying on your statement, review your earnings history for mistakes and find the future earnings assumption printed below the estimate.
SSA’s online account portal lets you adjust future income and compare claiming ages. If you plan to claim early while working, SSA’s retirement earnings test calculator can estimate how much may be withheld.
“Your statement is a great starting point,” Lum said. “It’s an estimate making assumptions about a future that you get to decide.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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