Ask Larry

Does The Fact That My FRA Is After Age 66 Mean Smaller Benefits?

I have decided to wait until ago 70 to file for SS benefits, mostly because of the 8% increase gained every year for delayed filing. As the Full Retirement Age gets pushed farther out (mine is 66 and two months) it leaves fewer and fewer years between FRA and age 70.
Does that mean smaller benefits for me compared to those born several years earlier, who have a FRA of 65, who have an additional year of the 8% gain?

Hi. Not necessarily. For one thing, the last people whose full retirement age (FRA) was 65 were people born prior to 1938, and when they reached FRA in 2002 delayed retirement credits (DRC) only amounted to 6.5% per year. The 8% annual increase for DRCs first applied to people who reached their FRA at age 66 in 2009 or later.

Although it's true that people born after 1954 won't be able to earn as much as the 32% increase from DRCs that could be accrued by people born prior to 1955, that doesn't necessarily mean that their benefit rate will be smaller. The primary insurance amounts (PIA) to which DRC increases are added are calculated using different wage indexing factors for each calendar year of birth ( As a result, you can't conclude that a person's benefit rate will be smaller than another person's benefit rate simply based on the number of DRCs they can earn. Too many different variables are involved in the benefit calculation process to be able to draw such conclusions.

That said, though, based on current law the maximum 32% DRC increase that can be earned by someone with a FRA of age 66 will gradually be reduced to 24% for people whose FRA is age 67.

Best, Jerry

Feb 12 2023 - 2:41pm
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