Dear Dr. Don,
I’m 63 and plan to retire this year. Finances will not be a problem, and I’m going to wait until I’m 66 (full retirement age) until I start taking Social Security. I’ll be supplementing my income with pensions and other investments, and I have a part-time opportunity to work for a nonprofit organization. When I do start taking Social Security, will my monthly amount be based on my last year of income, or will it consider all of the years that I’ve worked?

— Doug Depletion

Dear Doug,
Your Social Security retirement benefits are based on your average indexed monthly earnings during the 35 years in which you earned the most in your career.

Therefore, your retirement benefit will likely drop if you take a lower-paying nonprofit job in your final three years. Is the reduction in benefits substantial enough to consider changing your plans? I wouldn’t think so, but I don’t have the numbers in front of me.

To get the numbers in front of you, try using the “Social Security Detailed Calculator,” which can be downloaded from the Social Security website. You can run through several income scenarios. You’ll still earn an income for the next three years, and that beats earning nothing for those three years when it comes to calculating your retirement benefits.

Readers of this column know I’m a fan of earning delayed retirement credits by waiting to draw Social Security benefits until age 70. That wasn’t your question, but you should consider your options if you can afford to wait.

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