Q&A: How delayed Social Security retirement credits work - Ask Liz Weston (2024)

FAQs

Q&A: How delayed Social Security retirement credits work - Ask Liz Weston? ›

Dear Liz: I just got off the phone with the Social Security folks and they told me the 8% delayed retirement credit is based on your benefit at full retirement age, rather than an 8% increase every year based on the previous year's amount.

Delayed retirement credits (DRCs) are credits we use to increase the amount of your old-age benefit amount. You may earn a credit for each month during the period beginning with the month you attain full retirement age (as defined in § 404.409) and ending with the month you attain age 70 (72 before 1984).

Key Takeaways. Delayed Retirement Credits increase your monthly Social Security benefit by a certain percentage for each month you delay taking benefits past your full retirement age, up to age 70. The percentage of the increase depends on your year of birth - it's 8% per year for those born in 1943 or later.

If you stop working before you have 35 years of earnings, or you have low earnings for some years, this will affect your benefit calculation. However, if you wait to start benefits after you reach full retirement age, your benefits will increase for each month you do not receive them until you reach age 70.

This means delayed retirement credits apply to any benefit you decide to take past your full retirement age, so a relatively short period of time, but worth the increase. The most a lump sum check will ever be is six months of benefits, which could be up to $9,000.

COLAs enhance the value of these increased benefits because the adjustments are applied to the PIA, which in turn affects the delayed retirement credits. As a result, the longer the delay in claiming, the greater the cumulative impact of both DRCs and COLAs on the final benefit amount.

later, then your full retirement age for retirement insurance benefits is 67. If you work, and are at full retirement age or older, you may keep all of your benefits, no matter how much you earn.

Unless you specify a retirement date that precedes the date when you reach age 62 (the earliest age at which you can receive retirement benefits), the calculator assumes you will have covered earnings up to the year in which you start receiving a benefit.

If you become disabled before your full retirement age, you might qualify for Social Security disability benefits. You must have worked and paid Social Security taxes in five of the last 10 years.

If you start receiving benefits at age 66 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase.

How far back does Social Security retro pay? ›

If you apply one to five months after you reach FRA, you can get retroactive benefits in a lump sum for that number of months. If you file six months or more past full retirement age, you can get up to six months in back benefits.

There is no specific “bonus” retirees can collect from the Social Security Administration. For example, you're not eligible to get a $5,000 bonus check on top of your regular benefits just because you worked in a specific career. Social Security doesn't randomly award money to people.

Social Security tax FAQs

Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.

Social Security retirement benefits are increased by a certain percentage for each month you delay starting your benefits beyond full retirement age. The benefit increase stops when you reach age 70.

Also, your benefit will increase from the time you reach full retirement age, until you start to receive benefits, or until you reach age 70. We'll add 8% to your benefit for each full year you delay receiving Social Security benefits beyond full retirement age.

You must earn at least 40 Social Security credits to be eligible for Social Security benefits. You earn credits when you work and pay Social Security taxes. The number of credits does not affect the amount of benefits you receive.

We base Social Security credits on the amount of your earnings. We use your earnings and work history to determine your eligibility for retirement or disability benefits or your family's eligibility for survivors benefits. We cannot pay benefits if you don't have enough credits.