Social Security Delayed Retirement Credits: The Delay in Adding to Your Benefit

The Social Security Administration has a little trick up their sleeve. They don’t add your credits immediately if you file after full retirement age.

This is a little puzzling to me and I’m not sure why they do this. It’s not as if they don’t have the systems in place to do the calculations. After all, if you file early, the reductions are applied immediately!

I’m going to show you how this works but let me give you a little context around this first. I often discuss the monthly reductions for filing early or increases for filing early and understanding that is a fundamental part of today’s discussion. You can file for your retirement benefits between the ages of 62 and 70. If we imagine this red line is your full retirement age, your benefit is increased if you file after and decreased if you file before. The decreases are broken up into two separate bands. First, you have the 36 month period immediately prior to full retirement age where benefits are reduced by .556% per month and then anything more than 36 months where benefits are reduced by .417%. If you file after your full retirement age your benefit will be increased by .667% for every month. These increases are referred to as delayed retirement credits.

It's important to understand that there is a difference in how the increases and reductions are applied. If you file at any time before your full retirement age your benefit will be calculated by these reduction amounts and immediately reduced beginning with your first check.

That is not the case for the increases. In the operations manual you can see there are two times retirement benefits are increased for delayed retirement credits. One is in the month you attain age 70 and the other is in January of the year following the year you earned the delayed retirement credits.
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⚠️Since I don’t really know you, I can’t give you advice. Please don’t take this video as specific advice for your specific situation. Consult your own tax, legal and financial advisors. 👍
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