Should I Give Up Delayed Retirement Credits By Taking A Lump Sum Instead?

Apr 13 2017 - 10:00am

I'm 68+ and have "filed and suspended" since FRA at 66. I'm ready to start benefits. I am offered a lump sum of $ 66 K or start taking my higher benefit amount ($ 450 per month higher than my amount at age 66). I'm in good health. Is taking the lump sum or the higher monthly amount the better move? Any key criteria I can use to make the best choice?


If you suspended your benefits prior to April 30 2016, you have the option to undo your decision by requesting to have your benefits reinstated retroactively. If you do so, Social Security will pay you the suspended benefits in a lump sum, but with no interest. So, it would be the same as if you had simply started drawing your benefits at age 66 in the first place.

If you instead choose to defer drawing your benefits past full retirement age, you earn delayed retirement credits (DRC) at a rate of 2/3rd of 1% per month, or 8% per year. These DRCs can amount to up to a 32% increase in your benefit rate if you wait until age 70 to start drawing benefits.

When to start drawing benefits is a personal choice, but factors such as your health, your expected maximum age of life, and whether or not you have a spouse who may become eligible for widow(er)'s benefits on your record should all be factored into your decision. Widow(er)'s benefits can include any DRCs earned by the deceased worker, so your decision on when to start drawing may also affect your spouse's survivor benefits.

Best, Jerry