Ask Larry

Are COLAs Applied To My January Amount Or My December Amount?

I took SS at age 62 then suspended benefits at full retirement age (66yrs, 2 mos) . I plan to restart them at age 70. Are the annual cost of living adjustments based on my January (beginning) amount of the year or my December (year-end) amount? In other words, do I get the benefit of 12 months of the additional 2/3 of 1% monthly increase when calculating the new year's benefit? Thanks.

Hi Leni. You'll be credited with both the delayed retirement credits (DRC) you earn and the cost of living (COLA) increases that occur while your benefits are suspended. Since those are both percentage increases, in the overall scheme of things it doesn't really matter in which order the increases are applied.

Technically, though, annual COLAs become effective with the December Social Security benefits that are paid in January. DRC increases are credited effective with: January of the year following the year the DRCs were earned (i.e. the benefits paid in February), and in the month of age 70 attainment.

Best, Jerry

Oct 28 2022 - 4:27pm
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