How Can I Avoid Partial Year Delayed Retirement Credits?

Jun 19 2017 - 8:24am

I have a question about delayed retirement credits (DRCs), and am wondering if you can provide a precise, crystal-clear answer. It's my understanding that DRCs are calculated at the end of each calendar year, not in mid-year. So if I file to begin payments after age 66 (my FRA) and before age 70, my initial benefit amount will include DRCs for the month when I turn 66 through the end of the previous year prior to the effective date of initial payment. The partial-year DRCs that I earn during the year when I start collecting benefits will not get added into my payments until the beginning of the next year. And now due to budget cuts, Social Security might not initiate those partial-year DRCs for a couple of years. So here is my question: What is the best filing strategy to avoid partial-year DRCs? Do I file to start with an effective date in December (payment in January)? Or effective date in January (payment in February)? Or effective date in February (payment in March)? Or is it impossible to completely avoid? Will there always be at least one month of DRCs to be paid in a later year? I am seeing a lot of confusion out there on various other websites regarding exactly how this works. I hope my question is clear, but let me know if it is not. Thanks.

Hi,

If you want to avoid a recomputation to credit partial year delayed retirement credits (DRC), you'll want to select January (i.e. payment in February) as your month of election to start benefits. Or, you could choose the month that you turn age 70 regardless of what calendar month in which that occurs. In either case, your initial monthly payment would then include all of the DRCs which you've accrued up to your month of election.

Best, Jerry