Does anyone have any idea how much an additional year of working to knock out a 0 would add? Assume you max out the salary in that year to add the most possible. Just curious how that OMY would add to the SS piece.
My guess is that it would depend on how many years of employment you already have under your belt. If you already have 34 years in, and OMY puts you to 35, that's the final zero knocked out. Probably not much difference, even if your salary is over the cap.
Plus, there's those SS "Bend Points", where it's designed to cover something like 90% of your wages up to around $12K per year, 30% from $12K-60K, and 15% from $60K to the max. So once your taxable earnings are consistently above that second bend point (where it drops from 30% to 15%), I imagine a higher income really doesn't help much at all. Now I'm just guessing on these exact percentages and bend points, so the reality is most likely different, but I'm probably not that far off.
Now, if you only have 20 years of employment in, which would mean 15 years of zeroes in the calculation, then OMY would have a greater effect on the outcome.
I think most of the big increases in SS later in life come from delaying collection of it, moreso than actually working longer. For instance, according to my SS statement, I'll get about $1841/mo if I collect at 62, and $3312/mo if I wait until 70. However, I've run my numbers through the SS quick calculator, and if I was to quit working now, I'd still end up with about $1500/mo if I started collecting at 62.
So, an extra 11 years of working only bumps it about $350/mo. From there though, delaying a year bumps it up by 7% per year, until my FRA (67) and then 8% per year for each year until I hit 70. I think it's simple interest though, and not compounded.
Anyway, according to my calculation, which could be off, if I'm getting $1500 at 62, it should be $2025 for 67 ($1500 plus five years worth of $105 (7%) increases). And then at '70 it should be $2385 ($2025, plus three years worth of $120 (8% of the $1500) increases.)
If that 8% is based on my FRA amount, though, rather than the age 62 amount, I'm estimating $2511 ($2025 plus three years worth of $162 (8% of the $2025) increases.)
In my case, while I just hit 35 years, many of those were low-income years. So working longer would replace some of those years, and boost it somewhat.