Related Social SecurityThere’s a little-known rule that can greatly impact your monthly benefits: Your payments are calculated based on your 35 highest-earning years. If you haven’t worked the full 35 years, those missing years count as zero; This can lower your GPA and significantly reduce your benefits. Many people are surprised to learn this because it is not always emphasized in discussions of Social Security.

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In fact, a user on Reddit recently asked why this 35-year rule is not more known. They noted that even among early retirement enthusiasts on the platform, many were unaware of how significant those lost years could be for Social Security. Another user responded: “I don’t think people retiring early plan on hanging on to their SS checks, so that doesn’t count.” But for those who rely on Social Security, this rule is a game changer.

How Does the 35 Year Rule Affect Your Benefit?

Social Security looks at your 35 highest-earning years to calculate your Average Indexed Monthly Earnings (AIME), which determines your monthly earnings. If you don’t have the full 35 years, here’s what happens:

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• If You Worked 30 Years: Social Security will add five zero-income years to reach the 35-year limit. These zeros lower your average, which means you’ll receive fewer benefits than if you had a full 35 years of income.

• If You’ve Only Worked 20 Years: Social Security will count 15 years of zero income, which has an even more dramatic effect. Since almost half of your calculation is based on years with zero earnings, the reduction in your earnings can be significant.

• If You Worked More than 35 Years: For example, if you worked 40 years, Social Security will still use only your best 35 years, discarding the lowest-earning years. This means longer work histories can help you maximize your benefits by focusing only on your highest earnings.

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Why is Retirement Planning Important?

This rule may be especially important for people with a history of intermittent work (those who have taken time off to raise children, care for family members, or pursue other goals). If you’re hoping to retire early, it’s worth considering how missing years might affect your future benefits, especially if you need Social Security more than expected.

In early retirement communities, many members do not plan to rely heavily on Social Security. However, as life expectancy increases retirement savings need to last longerIt’s crucial to understand how even a few missing years can affect your financial picture.

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Increasing Your Social Security Benefit If Your Years Are Short

If you are approaching retirement age and have not earned 35 years of earnings, just adding a few more years – It can help even with a lower salary. Each extra year of income replaces zero, raising your average and potentially providing a larger monthly benefit.

In conclusion

The 35-year rule for Social Security may not be widely discussed, but it’s vital for anyone planning retirement. Missing years can result in a smaller Social Security check, so knowing this now allows you to make adjustments. Whether you’re an early retirement planner or just want to optimize your Social Security, knowing this rule can make a big difference in your future finances.

If you’re not sure how this will affect your situation, consider: consulting a financial advisor. They can help you understand your specific Social Security projections and recommend strategies to increase your benefits so you’re fully prepared for retirement.

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This article Think You’ll Get Full Social Security? Missing This 35-Year Window Could Cost You Thousands of Dollars originally appeared Benzinga.com

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