Social Security Delayed Retirement Credits: The Delay in Adding to Your Benefit

The Social Security Administration has a little trick up their sleeve. They don’t add your credits immediately if you file after full retirement age.

This is a little puzzling to me and I’m not sure why they do this. It’s not as if they don’t have the systems in place to do the calculations. After all, if you file early, the reductions are applied immediately!

I’m going to show you how this works but let me give you a little context around this first. I often discuss the monthly reductions for filing early or increases for filing early and understanding that is a fundamental part of today’s discussion. You can file for your retirement benefits between the ages of 62 and 70. If we imagine this red line is your full retirement age, your benefit is increased if you file after and decreased if you file before. The decreases are broken up into two separate bands. First, you have the 36 month period immediately prior to full retirement age where benefits are reduced by .556% per month and then anything more than 36 months where benefits are reduced by .417%. If you file after your full retirement age your benefit will be increased by .667% for every month. These increases are referred to as delayed retirement credits.

It's important to understand that there is a difference in how the increases and reductions are applied. If you file at any time before your full retirement age your benefit will be calculated by these reduction amounts and immediately reduced beginning with your first check.

That is not the case for the increases. In the operations manual you can see there are two times retirement benefits are increased for delayed retirement credits. One is in the month you attain age 70 and the other is in January of the year following the year you earned the delayed retirement credits.

Don’t miss my free online workshop, “How to Choose the RIGHT Age to File for Social Security.” In this workshop you’ll learn:
✔The Most Important Factors to Consider BEFORE You File for Benefits
✔How to Coordinate Your Social Security Filing Decision with Your Other Assets & Income for a Tax Efficient Distribution Strategy
✔Why This Is The Biggest Decision of Your Retirement

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⚠️I am not an attorney, SSDI advocate, or affiliated with the Social Security Administration or any other entity of the US Federal Government. I am a practicing financial planner, but I’m not YOUR financial planner and since I don’t really know you, I can’t give you advice. So please don’t take this video as specific advice for your specific situation. Consult your own tax, legal and financial advisors. 🙇🙇🙇🙇🙇
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[brucescanlan]

Very good breakdown. Devon is my favorite to get updated on SS.

[johnc]

Booked an appointment with my wife at our SSA office last August, as my wife was thinking to start her benefit on her 68th birthday in October. The agent spit out a four-year worksheet showing what she could expect for her first deposited payment in November. It would NOT be the 16-percent increase at all (for waiting two years beyond her FRA), but more like a 10-percent increase going back to January 2019 (8 percent for waiting a year, plus another 2 percent for the January application three months after her birthday). At this comment, I recalled this video of yours and knew immediately what the agent was showing my wife and what he might suggest.


The agent then suggested putting into effect what you explained in your video for my wife's particular situation: wait three more months to January 2020 to get the immediate 16-percent added to her benefit by waiting until October 2019, plus an additional 2 percent by waiting just three more months beyond her birthday to start her benefits payments on her own record in January 2020. (She's getting spousal payments now based on a "restricted application" she filed just before the virtual window on that "loophole" was closed by the Obama administration in a law enacted in late 2015; I had just "filed and suspended" my own benefit so my DRCs would accrue, the "other shoe" of that now-banned and evil "loophole.")


Our kind, very experienced SSA agent also noted that her FRA would be adjusted upward, too, if there was a COLA, and this would be applied before her payments went into effect, further enhancing her SSA payout. The COLA is 1.6 percent (not much), but it applies to her FRA, adjusting it up, making the DRCs worth a bit more than the worksheet showed. So, her benefit payments (which she'll see starting with the February deposit) will go up considerably more than just 10 percent (plus the COLA) from what she would have received had she pushed ahead starting her benefit payments last October or even a flat 18 percent by starting in January 2020. A "win-win." We have made a December appointment to put this plan to work! Thanks SSA, and thanks Devin. 😁

[theeard]

Thank you. Now I have no doubt I'll NOT file to start collecting benefits in the 'dead zone.'

[thrasher]

Devin, thanks for the info. Never knew about this delayed benefit payout by SS.
I applied at 66 years, 4 months, in May (January birthdate) and I did understand the January beginning payment for the delayed monthly benefit. However, I thought I'd receive the backpay for the 7 months of SS benefit when I applied in May. I called several times to correct this and they never gave me a satisfactory answer. YOU answered it perfectly! At the 3 minute mark.
Thank you for your help!
The lesson learned (and its too late now), apply in November-December, NOT May, as I did.

[paulhughes]

I'm learning things about SS that I never knew. As a matter of fact I really didn't know anything except when full retirement age was.

[johnc]

I just turned 70 - TODAY - and recall this great video from April. I haven't received any communication from Social Security since March 2017. I did file and suspend back in 2015 so that my wife could take spousal benefits (she filed a restricted application for them). I called the SSA in March of this year asking what action I needed to take to ensure my benefits start at 70. I was told I need do nothing, and the agent gave me a rough estimate (based on my FRA amount) of what I could expect, starting the fourth Wednesday in July. I was told I'd be getting a letter "in June or even late May" explaining what I'd get. No letter, so far. I called yesterday and asked again. This time the agent mentioned that nothing apparently had been done on my "file" since 2017 (could almost hear him blowing the dust off of it as if it were a paper file). He said that I'd be getting the delayed retirement credits added to my first benefit payment, but NOT for the first six or seven or eight (he wasn't sure how many months in the year there are before and including June, I guess!) months of the year leading up to my June birthday. He said the DRCs would be included in the calculation, starting in January 2020, but not in the six benefits payments I'd get from July through December. He was following the first example you showed where someone files before 70 and has to wait till the following January for the DRCs to be calculated in. This is just the opposite of your second example and statement (and POMS citation, which I found, too) where you note that if someone starts taking benefits right after they turn 70, there are no delays in earning the full amount for having delayed till the age of 70. The agent could not even give me a clear and concise dollar amount of what I could expect (I got a couple of different estimates). He also gave me a different amount from what the agent in March said my FRA was. It's as if I have been talking to two different SSA organizations. Finally, he said that my first benefit payment could even arrive early in July (not the fourth Wednesday, per my birthday) and before any letter of explanation. It's as if I woke them up from a long coffee break. It is one CONFUSING MESS. Maybe the computer calculations the SSA actually uses, based on the POMS, will be accurate (not the stories I'm getting from the agents). Just thought I'd let you know... and thanks for this great video.

[ajankowski]

Is the delay simply because the Government has no idea how much you have earned post-full retirement date UNTIL they get your W-2 information the following January/February? Makes perfect sense to me. How can they do the calculation if they don't know how much to increase it by?

[davidpowell]

Applied to start receiving Social Security retirement as of two months after having 69th birthday. I understood that delayed retirement credits for that year (first received benefit in August after birthday was in June) would not be paid retroactively for the remaining months in that year but should have been reflected as an increased benefit starting or following January of the next year. But January came around and no benefit increase of that type (there was the COLA increase)
January the next year came around and still no increase. Then a weird payment of about $1000. appeared, I think during this last August. No explanation at the time. Then some weeks later a mailing from SSA came, explaining a very convoluted set of calculations and catch ups including a breakdown that the weird payment was net of tax withholding and that my monthly benefit going forward would be increased.

[haroldbridges]

Interesting. SSA is taking advantage. I will start collecting at age 70 in a few months, so it doesn't affect me, but good to know.

[jefferypfister]

Just rewatched; reminded me to file in December

[sumralltt]

Can you talk about Grandfathering if they change the rules again from past actions - It's a shame that you can qualify to take SSN but because you waited now your under new rules.

[jcav]

I retired in May of 2022 at 69+2 two month which should have given me 25.3 delayed credits however I only received 22.7 credits. I was told that it would be recalculated and I would receive the other 2.6% and any benefits owed from January 2023. Well it’s been 1 year 11 months and still no recalculation. Tried to contact social security and I’m getting the run around would seem no one I speak to knows anything about withholding delayed credits I guess my next step will be seeing my local representative.

[bananapatch]

I want to retire at 62 and move abroad. I could delay taking SS, but if I am no longer working they would be averaging in $0 every year to my top 35 earning years...so at 67 I think the amount I’d receive would be just a tiny bit higher at 67. Doesn’t seem like it makes sense to delay getting my check. Am I wrong ?

[vwimports]

Devin, my parents filed after full retirement age over 2 years ago and SS still have not given them the proper credits. Any tips on getting them to fix this?

[maitong]

Very useful tip. Just a question, my birth day falls in June, if I file in December to start my social security benefit on Jan 1 the following year after my full retirement age, will I get my delayed retirement benefit right away in January or it will wait for another full year?

[retirednow]

Hi Devin,
I’m 63 and have a 13 year old as well as a wife at home. If I take SS benefits now, I’ll be getting a significant monthly distribution until the 13 yo turns 18.
Question is should I take it now
Or wait till I’m at Fra?

[RobertMiller-okpz]

My grandfather died at 54 my uncle died 52 my brother died 42 my dad at 67 so I took mine at 62 smart thing to do any ways at 70 that’s 8 years to make up i have to live age 80 telling take it ASAP

[anniesshenanigans]

so you may as well wait until December after full retirement..because you won't get any benefit mid year.

[SantaBarbaraAlberto]

So you should always file in January after your FRA has been attained.

[joechrisman]

Questions 1. Who owns the account that the 2.6 trillion $ that circulates the SS money ? 2. Who get or what happens to the interest on the 2.6 trillion in circulation on the SS account ? Thanks & God