I've heard that if I delay applying for Social Sec benefits by 2 years past my FRA (my FRA is 66), I might have to wait months or even into the following year before the 16% increase kicks in. I'm now 68 and if I apply now to start receiving benefits, how long will I have to wait to get the 16% increase and more importantly will I be retroactively paid the 16% for each month that I have to wait?
I became 66 April 19, 2015 but did not apply for benefits.
I became 68 April 19, 2017 and am considering applying this month (May). I'm assuming that I'd start receiving benefits in June or July and that the 16% increase probably won't be present for awhile.
If I have to wait (say 9 months) before the 16% kicks in, will I be paid the 16% retroactively for each of the 9 months I had to wait?
If you file for benefits between full retirement age (FRA) and age 70, delayed retirement credits (DRC) are initially credited only through December of the year prior to your month of entitlement. Any additional DRCs due for the year of entitlement are credited effective with the benefit payment due for January of the following year.
So, in your example, if you apply for benefits effective with May 2017, you would initially be credited with 21 months (i.e. April 2015 through December 2016) of DRCs, or 14% (i.e. 21 x 2/3rds of 1%). Your additional credit of 2 & 2/3rds% for January-April of 2017 would be credited effective with your payment for January 2018. In other words, January 2018 is the first month that you would be entitled to the full DRC credits totaling 16 & 2/3rds%.
The last I heard, Social Security only recalculates benefits to include post-entitlement DRCs every other year, so it may take as long as 2 years before you would actually see the additional 2 & 2/3rds% increase in your benefit rate. The additional credits would be retroactive to your payments for January 2018-on, but not for months prior to that.