Since my immigration to USA in 1994, I have been earning income from employment. When I reached FRA in 2013, I have 20 years of work history in SSA. Currently I'm still employed with an annual income of about $65k and would continue for a few more years. My questions:
1) How is my delayed retirement credits calculated for years beyond my FRA? Is the basis on 8% annual higher benefits re-calculated every year with my continued annual income beyond FRA? I have been tracking SSB estimates every year, it seems that I do not get much extra credits with continued annual income contribution to SSA.
2) If I start collecting SSB at age 70, how do I ensure the annual income for my year 69-70 being included in the final SSB calculation? I was born in Nov and the tax return does not get reported until April next year.

Hi,

First, Social Security calculates your full retirement age benefit amount, or PIA, which means primary insurance amount. Your full retirement age benefit amount is based on an average of your best 35 years of inflation adjusted earnings. If you have less than 35 years of earnings, zero earnings years are included in the averaging.

You can continue increasing your PIA for as long as you live if you earn enough to replace one of your previous 35 highest earnings years. Your PIA can be recalculated annually, and any increase due is payable beginning with the check for January of the year following the year of the higher earnings.

After the PIA is calculated, or recalculated if applicable, delayed retirement credits (DRC) are then added at a rate of 2/3rds of 1% per month for each month that you deferred taking benefits between full retirement age and age 70. In other words, the DRC increase is calculated as a percentage of the PIA, which can be increased on an annual basis with additional years of higher earnings.

With regard to your second question, if you start your benefits in November, your PIA will initially be calculated based on your best 35 years of inflation adjusted earnings through the previous year. For example, if you become entitled at age 70 in November 2017, your initial PIA will be based on earnings through 2016. The monthly amount payable will then be increased by 32% of the PIA. After your 2017 earnings are credited, assuming they are higher than one of your prior 35 best years, your PIA will be recalculated effective with your check for January 2018. DRC's will also be recalculated at a rate of 32% of the new PIA. Even if your 2017 tax return isn't filed until April of 2018, you will eventually still receive any increase due retroactive to your check for January 2018.

Best, Jerry