I was reading about delayed credit and I was wondering, when you look at what you are going to collect at age 66, 67, 68, the amount increases with every year you wait, is the amount reflective of the delayed credits or are the delayed credits on top of what you would get later? For example, if I am receiving $2,500.00 at month at 66, would my increase at 68 be because of delayed credits, or are delayed credits like a bonus? Also do I have to apply for benefits and then suspend to get the delayed credit?

Hi. The reason that your benefit rate goes up for each month that you delay collecting benefits past full retirement age (FRA) is due to delayed retirement credits (DRC). DRCs increase your Social Security retirement benefit rate by 2/3rds of 1% for each month that you don't collect benefits from FRA until age 70.

Your benefit rate wouldn't go up after FRA if you're collecting your benefits, except for cost of living (COLA) increases of if you work and earn enough to increase your benefit rate. Social Security retirement benefits are based on an average of a person's highest 35 years of Social Security covered wage-indexed earnings, so additional years of earnings only increase a person's benefit rate if they're higher than one or more of the 35 years currently being used to calculate the person's benefit rate.

For example, say Bob stops working at age 64 but decides to wait until age 70 to start drawing his Social Security retirement benefits. Bob's FRA is 67, and his primary insurance amount (PIA) is $2000. A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA). Bob doesn't have any earnings after FRA, so his PIA would not increase except COLAs. However, Bob's monthly benefit rate would increase by 2/3rds of 1% for each month that he delays taking his benefits past his FRA, which would amount to a 24% increase (i.e. 2/3rds of 1% x 36 months) if he waits until age 70. Therefore, if Bob's PIA is $2000 and if he starts drawing at age 70, his age 70 benefit rate would be $2480 (i.e. $2000 x 1.24).

And, no, you don't need to file for and suspend your benefits in order to earn DRCs. You'll still earn DRCs starting at FRA if you simply wait until later to apply for your benefits. You may want to strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully analyze the options available to you in order to determine your best strategy for maximizing your benefits.

Best, Jerry