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Social Security: What are delayed retirement credits?

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Q: What are delayed retirement credits?

A: You can start Social Security retirement as young as age 62 or wait to a later age.

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Full retirement age (FRA), also called normal retirement age, is the Social Security Administration term for how old a person must be to receive retirement without age-based reductions.

FRA is age 66 for people born in the years 1943-1954.  Delayed retirement credits (DRC’s) are increases to a retirement benefit received when a person delays starting their retirement benefits past full retirement age.

DRC increases stop when you reach age 70 even if you continue to delay receiving benefits. There is no additional advantage to putting off SSA retirement once you reach age 70.

As with reduced benefits for early retirement, the amount of delayed retirement credit increase to you depends on the number of DRC’s involved. The monthly DRC increase for people born in 1943 or later is 2/3 of 1 percent per month for a yearly increase of about 8.0 percent.

Retirement benefits started prior to FRA are referred to as “early” while those started past FRA are “late (delayed).” With the Social Security online Retirement Planner (http://www.socialsecurity.gov/retire2/) you can use the “compute the effect of early or delayed retirement” calculator to estimate DRC amounts on a monthly basis.

There is no single best age to start receiving Social Security retirement. It is a very individual decision. Overall, if you live to the average life expectancy for your age, you will receive about the same amount in lifetime Social Security benefits whether you start at age 62, full retirement age, age 70 or any age in between. However, monthly amounts can differ substantially based on your actual age at retirement. You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time. The amount received when you start benefits sets the base for the amount received for the rest of your life. Every choice has advantages and disadvantages but people are more likely to start Social Security retirement when younger.

Based in Grand Forks, Howard I. Kossover is the Social Security Public Affairs Specialist for North Dakota and western Minnesota.  Send general interest questions to him at howard.kossover@ssa.gov. Read his online articles at socialsecurityinfo.areavoices.com.

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