The Retirement Trick Most People Never Consider - And It Could Add Thousands to Your Social Security Check

If you're counting on Social Security and looking for ways to maximize your senior benefits, you may be aware that delaying your claim until age 70 is a great way to boost those monthly checks. Your monthly benefits increase 8% for every year you delay your claim past full retirement age (FRA), up until you turn 70.

But it's not easy to delay Social Security benefits until 70. Many people can't work that long or don't want to work that long. And if you don't have retirement savings to tap, claiming Social Security at 70 becomes a lot less feasible unless you stay in the workforce.

But there's a different move you can make that could lead to larger Social Security benefits for life, and you may find that it's a lot easier to pull off than waiting until your 70th birthday to file.

Why working one more year could pay off in retirement

While working a number of years beyond FRA (which is 67 for anyone born in 1960 or later) to claim Social Security at 70 can mean making a huge sacrifice, working one extra year may be a far more reasonable thing to do. And it could benefit you in a number of ways.

If you don't have a lot of retirement savings, an extra year of work could give you an opportunity to make last-minute contributions to your IRA or 401(k). And if your 401(k) comes with a workplace match, you may find that an extra year of contributions goes a long way.

Just as importantly, working an extra year allows you to leave your existing retirement savings alone for 12 more months. If you retire at age 68 instead of 67, for example, and live until age 88, your savings only have to provide 20 years of income instead of 21, allowing you to withdraw more money each year.

How one more working year can increase Social Security benefits

Working an extra year could also do great things for you from a Social Security standpoint. First, it could make it possible to delay your claim by another year, thereby leading to larger monthly benefits. Also, working another year at a higher salary than what you earned earlier in your career could boost your earnings in your benefits formula.

The Social Security Administration takes your 35 highest-paid years of wages into account when calculating your retirement benefits. If you're earning, say, $80,000 a year now, but you spent most of your career earning between $45,000 and $65,000 a year, another year of $80,000 in income could replace a year of lower wages. That could lead to larger Social Security checks every month which, in your lifetime, could put thousands of dollars extra in your pocket.

Medicare is another reason to work one more year

There are a number of perks of working an extra year. In addition to stretching and boosting savings and potentially locking in larger Social Security checks, working longer might help you bridge an otherwise costly healthcare gap.

Let's say you're looking to retire at 64 but you push yourself to work until 65. At 65, you're eligible for Medicare. If you were to retire at 64, you'd potentially have to get health insurance in a more expensive manner.

Working an extra year could also help a spouse of yours avoid a costly healthcare gap. If you both get insurance through your job, working 12 more months could help them retain their health coverage longer.

The drawbacks of working one more year

Even though working an extra 12 months could improve your finances, you need to consider your health. If your job is very stressful and sticking with it longer means subjecting yourself to deadlines, demands, and a lengthy commute, it could have a negative impact on your physical and mental health.

Also, if you already have health issues and aren't so confident you'll live a long life, forcing yourself to work for an extra year could mean denying yourself a year of better health in retirement. You could risk losing out on certain travel opportunities or other experiences because you spent a year of decent health at the office instead of exploring the parts of the world you always wanted to see.

Bottom line

Working an extra year could help you grow your wealth for retirement. It could also lead to larger Social Security checks for the rest of your life. So it could pay to push yourself to work an extra 12 months beyond your original retirement date.

That said, if you really can't manage a full-time work schedule for another 12 months, you can look at part-time work instead. You may find that it not only benefits you financially, but mentally.

The transition into retirement can be tricky and jarring. Working part-time for an extra year is a great way to ease into being retired so you don't go from a full-time work schedule to the shock of suddenly having nowhere to be at all during the workweek.