How Are Delayed Retirement Credits Applied?

Nov 30 2016 - 10:45am

My wife applied online for benefits to start when she turns 67 in March. We just received a call from the worker at Social Security handling her claim. She said the amount my wife would receive would be the same if she starts in January as it would if she starts in March because delayed retirement increases are only applied in January. I don't think I'm getting the whole story. According to the calculator on the social security web site, the benefit if starting in March is 108% of PIA, but in January is 106.67% of PIA.

It sounds like the monthly amount received during 2017 would be the same starting in either January or March, but if she starts in March will the 2018 amount be higher than if she starts in January?



When a person files for Social Security retirement benefits between full retirement age and age 70, delayed retirement credits (DRC) are initially added only through the December preceding their month of entitlement. So, the Social Security representative is correct that your wife would receive the same benefit rate initially whether she starts benefits effective with either January or March, 2017. However, if she starts with March, her benefit rate will be increased effective with the following January (2018) to give her credit for 2 additional DRCs for the months of January & February of 2017.

So, the rest of the story is that starting with March 2017 instead of January 2017 will ultimately give your wife a 1.33% higher benefit rate starting with January 2018. I should add that the recalculation to credit the extra 2 months of DRCs will likely not be done for quite some time after January 2018. However, the added credits are fully retroactive, so your wife would receive the appropriate back pay to January 2018.

Best, Jerry