More SS, what is this credit thing?

[Time2]

As I understand, retiring in certain months you have to wait until next year to have credits added to bump your SS check. But I don't understand it.


I do see this, "Benefits can be higher than the PIA if one retires after the normal retirement age. The credit given for delayed retirement will gradually reach 8 percent per year for those born after 1942. A table illustrates the complex interaction among normal retirement age, actuarial reduction, and delayed retirement credit. No delayed retirement credit is given after age 69."

So if I collect in January and my 69th birthday is in March, It seems I have some delayed credits, when would they be applied? What is the benefit if I wait until April to start SS.


I also see I get 2/3 of 1% additional for each month I wait.

 

[qwerty3656]

I interpret this as if you work past full retirement age. If so you can increase benefits beyond FRA.

 

[Done]

Yes, you earn delayed retirement credits for each month you wait to claim after full retirement age. Your benefits are permanently increased by 8% per year, or 8/12 = 2/3 percent per month delayed, capping out at a maximum at age 70. Conversely, if you claim early, your benefits are permanently reduced by a factor.

If you claim mid-year, the delayed credits for that year don’t start being paid until January of the following year (or immediately if you turn 70).

Many on this board choose to delay until age 70, but this is an individual decision that depends on your age, health, marital status, and financial needs. There are online calculators to help with this decision, such as Open Social Security.

 

[latexman]

Check out this thread and pay particular attention to MissMolly's replies.

 

[SevenUp]

According to the Social Security - Bogleheads wiki regarding credits for delaying retirement past your full retirement age

Filing for your benefit to begin in January (received in Feb) means that no months are "missed," and filing for your benefit to begin in July is worst in terms of the number of months missed.

Bogleheads® Live: Submit ?s for Mike Piper on Social Security - Bogleheads.org is a more detailed reference.

 

[5Miler]

I went through this recently as I claimed SS at 68 yrs 5 mos in Nov 2021 with my first payment to begin Dec 2021. As my FRA was 66, that meant I had accumulated 29 months of Delayed Retirement Credits (DRCs).

Apparently SS only updates DRCs in January and it only applies if you are past your FRA. I had all the number worked out and expected the following.

Nov 2021 - First month claiming SS
Dec 2021 - First SS check minus DRCs for 2021
Jan 2022 - First check of 2022 to include COLA for 2022
Feb 2022 - Check to include 10 months DRCs for 2021.

Everything happened as I anticipated except I didn't get my 10 months of credit for the 2021 DRCs. Everything I read said they would update my payment the first January but it didn't happen.

It also didn't happen the next January, 2023. I received the COLA increase as expected but still no credit for my last 10 months DRCs for 2021. That amounted to 6.66% increase to my PIA that I was missing.

Those final DRCs eventually came through in August 2023 (yes, last month) increasing my monthly benefit by $195 per month gross along with a check (auto deposit) for $3,515 for back payments minus taxes. I do have taxes taken from my SS to finance my Roth conversions.

So when you hear that they will catch up on the DRCs the next January, don't believe a word of it. It can take almost two years to see the payment. My advice is to either claim in Jan for first payment in Feb or wait until 70 if you don't have the patience for waiting.

At least my SS payments now match to the penny what I had calculated my payments to be when I first filed taking into account the two COLA increases in the meantime.