How Are Delayed Retirement Credits Earned?

Jan 8 2017 - 6:15am

I am going to claim my SS benefit within the nexty 12 months in order to allow my wife to file for Restricted Spousal benefits in March of 2018. Does my SS benefit increase on a monthly basis, I turn 66 in June, or is it an annual increase. I would like to claim December 2017, if my benefit increases 3 to 4% by waiting until I am 66 1/2.

Hi,

You earn delayed retirement credits (DRC) for each month that you delay taking benefits from full retirement age (FRA) until age 70. The amount of each monthly credit is 2/3rds of 1%, which amounts to 8% per year. So, if you start taking benefits at age 66 1/2, you will earn 4% of DRCs. However, when you start benefits between FRA and 70, DRCs are initially credited only through December of the year prior to your month of entitlement to benefits.

For example, if you turn 66 1/2 in December 2017 and start benefits with that month, you won't be credited with any DRCs initially. The 6 DRCs you would have earned for the months June through November 2017, would be added later, and would increase your benefit rate by 4% effective with your payment for January 2018. Post-entitlement DRCs are added through an automated process. Due to budget limits, the Social Security Administration (SSA) has given this process a relatively low priority, and only runs the updates every other year. The increases due are fully retroactive, but this results in a substantial delay in receiving the proper amount of DRCs. As a result, it may be until sometime in 2019 before you'd actually receive your DRC increase. You would receive the appropriate back pay to January 2018, however.

If you haven't already done so, you may want to consider running the maximization software available on this website before applying for benefits. The software is programmed to handled DRCs, and should help you determine the best time to start taking your benefits.

Best, Jerry