Ask Larry

How Are Social Security Benefits Calculated?

How is the SS benefit calculated if a person starts to draw it at 70 and if he worked full time from the age of 66 to 70, but did not take SS benefits, while he and his employer continued to make SS and Medicaid contributions??


Social Security retirement benefits are calculated based on a person's highest 35 years of wage-indexed earnings. For more detailed information, refer to this Social Security publication:

There is no age limit for determining the years used in the benefit calculation, so your earnings from age 66 to 70 will be used to calculate your benefit rate if they are among your highest 35 indexed years. Once your base rate is calculated using this method, delayed retirement credits (DRC) can then be added for any months that you defer taking benefits between full retirement age and age 70. DRC's are credited at a rate of 2/3rds of 1% per month, or 8% per year. So, a person who reaches full retirement age at 66 and delays taking retirement benefits until age 70 can receive a 32% higher benefit rate than they would have received if they'd started drawing their benefits at age 66.

The maximization software available on this website is programmed to handle all of these calculations tailored to each person's circumstances.

Best, Jerry

Apr 20 2017 - 8:09am
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