The Delay of Delayed Retirement Credits

Today we're taking about delayed retirement credits and how they get added to your benefit. If you plan to file after your full retirement age, you may be disappointed when you get your first check because those credits aren’t added right away. Let me explain what you should expect and when to apply for benefits to minimize this delay.
Today we're taking about delayed retirement credits and how they get added to your benefit. If you plan to file after your full retirement age, you may be disappointed when you get your first check because those credits aren’t added right away.  Let me explain what you should expect and when to apply for benefits to minimize this delay.

What do you know about delayed retirement credits — and how confident are you in that knowledge?

If you don’t fully understand how delayed retirement credits work and how they get added to your benefit amount, you might be disappointed when you receive your first Social Security check after you file.

You should know that when you delay filing for your Social Security benefits after your full retirement age, your delayed retirement credits aren’t added right away.

Here’s why, what else you need to understand, and when you should file instead to minimize the delay.

Why You May Be Missing Credits

Does the Social Security Administration have a little trick up their sleeves when it comes to delaying your benefits?

It can look that way! They do not add your credits immediately if you file after full retirement age.

To be honest with you, 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!

So why don’t you get the same treatment when you delay filing?

I’m going to show you how this works — but let me give you a little context around this first.

Know How to Calculate Monthly Changes to Your Benefits

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. Let’s take a look at this chart to start:

Today we're taking about delayed retirement credits and how they get added to your benefit. If you plan to file after your full retirement age, you may be disappointed when you get your first check because those credits aren’t added right away.  Let me explain what you should expect and when to apply for benefits to minimize this delay.

You can file for your retirement benefits between the ages of 62 and 70. The red line in the chart above represents your full retirement age.

Knowing this, you can calculate how much your Social Security income benefits should increase if you delay filing — as well as how much those benefits might decrease if you file before full retirement age.

If you file early, 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 .555% per month, and then anything more than 36 months, benefits are reduced by .417%.

But 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.

What Happens If I File After My Full Retirement Age?

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.

Today we're taking about delayed retirement credits and how they get added to your benefit. If you plan to file after your full retirement age, you may be disappointed when you get your first check because those credits aren’t added right away.  Let me explain what you should expect and when to apply for benefits to minimize this delay.

In the Social Security Administration’s operations manual, you can see there are two times retirement benefits are increased for delayed retirement credits:

  1. The month you attain age 70
  2. In January of the year following the year you earned the delayed retirement credits.

Let’s look a specific example to better understand this.

Make Sure You Understand the Full Impact of When You Choose to File

Let’s assume your birthday is in February, and this is the year you hit your full retirement age.

Six months later, you decide to file for benefits and you receive your first check in September of that same year.

You’ve probably already calculated in your head that you should receive 6 months of delayed retirement credits; that works out to 4% increase to your full retirement age benefit.

When you get your first check deposited in September, therefore, you might be surprised to find that check is for the same amount as it would have been had you filed for Social Security benefits back in February.

The delayed retirement credits would be added — eventually. The fact that they don’t kick in immediately throws many people off!

You’d probably see the delayed retirement credits come through starting in January of the following year, which means you wouldn’t see it on your actual checks until that February.

And no, you don’t receive any sort of payment to make up for those months that you missed.

Can You Get Your Delayed Retirement Credits Faster?

One way to lessen the lag is to file later in the year.

If you want to avoid this lag altogether, you could wait until your 70th birthday. Then, no matter what month it falls on, the delayed retirement credits are added immediately.

Maybe in the future the Social Security Administration can figure out how to do this for any filing age after full retirement like they do before. It can’t be that hard, right?

One would think!

But for now, this is how the system is set up. It’s important to know this so you can get proactive and plan accordingly — and not get hit with a nasty surprise after you’ve already delayed filing so you can get a bigger benefit.

Take Control, Because It’s Your Retirement and Your Benefits

You’re making a smart move by learning all you can and reading sites like these, but don’t use this as specific advice for your own situation. I encourage you to do your research and talk to your own advisors. Most importantly, continue to educate yourself and stay curious!

If you still have questions, you could leave a comment below, but what may be an even greater help is to join my FREE Facebook members group. It’s very active and has some really smart people who love to answer any questions you may have about Social Security. From time to time I’ll even drop in to add my thoughts, too. 

You should also consider joining the 100,000+ subscribers on my YouTube channel! For visual learners (as most of us are), this is where I break down the complex rules and help you figure out how to use them to your advantage. One last thing that you don’t want to miss: Be sure to get your FREE copy of my Social Security Cheat Sheet. This handy guide takes all of the most important rules from the massive Social Security website and condenses it all down to just one page.

Top 5 Social Security Books

Today we're talking about my favorite books on social security. If you’re serious about your retirement plan, you need to understand how this program works. After reviewing dozens of books that cover the topic, I’m going to tell you which 5 will get your knowledge level up to the point where you can feel confident.
Today we're talking about my favorite books on social security. If you’re serious about your retirement plan, you need to understand how this program works. After reviewing dozens of books that cover the topic, I’m going to tell you which 5 will get your knowledge level up to the point where you can feel confident.

Today we’re talking about my favorite books on social security. If you’re serious about your retirement plan, you need to understand how this program works. After reviewing dozens of books that cover the topic, I’m going to tell you which 5 social security books will get your knowledge level up to the point where you can feel confident.

You know what I’ve never found? Someone who said their social security wasn’t important to them. In the 16 years I’ve spent as a financial planner, I’ve advised clients who were very wealthy down to the clients who were of much more modest means.

All of them have been very concerned that they maximize their income stream. If you look at the data you can see why. When you look at both married and unmarried retirees, 62% rely on SS for HALF of their income. This is a program that needs to be understood. Thankfully, there are some fantastic books out there that break this down and make it easier to understand. Today I want to tell you what my top 5 books on social security are.  

First, I’ll start with two that are great at giving you the fundamentals. These two books will help you build a foundation for the slightly heavier reading to follow. The good part is they are both around 100 pages so you can read these quickly and then read them again to really lay the foundation.  

1. Social Security Made Simple by Mike Piper

The first book is Mike Piper’s Social Security Made Simple. It’s a short read but it hits the surface of a lot of topics within social security. He breaks this book down into three parts. Part one is about 27 pages and speaks in clear and concise terms about how benefits are calculated and how you qualify for them. Part two is about the same length and turns up the dial with rules for less common situations. He talks about Social Security for divorced spouses, childrens benefits, the earnings limit and even the windfall elimination provision and the government pension offset for those who worked at a job where they did not pay into SS. My personal favorite is part three. This is where he gets into the “when to file” question. He talks about how a single person should approach this decision. How married couples should coordinate benefits and then in chapter 13 he addresses taking social security early to invest it. Good stuff!

BUY IT HERE ON AMAZON

2. Social Security Basics: 9 Essentials That Everyone Should Know by Devin Carroll

The second book on my list is my book. I know…that’s somewhat self serving. But I included that because I do think its one of the best books out there that covers the fundamentals. If you read my book and Mike’s book, you’ll have a deep understand of the basics (and probably be smarter than many financial advisors.) I don’t try to get fancy in this book. I simply wanted to take the most relevant parts and put them in a book that was easy to understand. I’ve found over the years that most of the SS questions I receive could be answered with a good knowledge of the 9 social security basics and that’s what this book covers.

BUY IT HERE ON AMAZON

3. Get Whats Yours – The Secret To Maxing Out Your Social Security by by Laurence J. Kotlikoff, Philip Moeller, and Paul Solman.  

With book number three we start to get a little deeper. Its Get Whats Yours-the secret to maxing out your social security. This is the only SS book that I know of that has made it on to the New York Times Bestsellers lists. This book was written by three authors—all social security experts in their own right. This is the perfect book to read after you’ve read the first two on my list. The book is conversational, but the subject matter is dense. In my opinion, chapters 16 & 17 make this book worth it. This is where they cover the 50 Good News Secrets to Higher Lifetime Benefits and 50 Bad-news Gatchas that can reduce your benefits forever. There could easily be ONE THING you read in these two chapters that will make the book purchase worth it.

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4. Social Security For Dummies by Jonathan Petersen

What I like best about the Dummies series is that they take topics that are hard to understand and turn it into something that is easy to use. In my opinion, the best part of this book is Part 5. While the entire book is full of useful knowledge, Chapter 15, which is the beginning of Part 5, covers the myths of social security and replaces them with facts. Chapter 16 refers to why young people should have a big stake in social security, and should follow the policy changes that are coming up in the next few years. Chapter 17 finishes it up by talking about the realities of the future of social security.

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5. Social Security: The Inside Story, 2018 Silver Anniversary Edition by Andy Landis

This book is detailed and comprehensive but is easy to read. I absolutely love this book. The author actually worked for the social security administration for over a decade and it shows almost as soon as you open the book. It has examples, graphics and website links to back up what the author is saying, and gives you confidence that you are on the right path. I personally use this book as a personal reference. I also believe it does not need to be read all at once, but can be used as a topical reference to answer your questions as they come up.

Whether you are a retiree, a to-be retiree or a financial advisor, this book needs to be on your shelf.

BUY IT HERE ON AMAZON

I’ll have to admit…narrowing down this list to my top 5 wasn’t easy. There are some other great books out there.

One last thing…I’ve linked up all of the books we’ve discussed here. Full disclosure…if you buy one of these by using my link above, I’ll get paid a small fee from Amazon. 

Remember…THIS IS YOUR RETIREMENT. CONTINUE TO LEARN AND STAY INFORMED because no one is going to feel the pain of retirement planning mistakes like you will.  

Now that you’ve read this article (which is a great first step in understanding Social Security), I’d recommend staying connected with my content so you won’t miss anything. In many cases I’ll publish my newest stuff on YouTube and then share it on my Facebook page. Then my content team does their magic and cleans it up into an article for those who enjoy reading. (Again…the article is shared on my Facebook page.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

In addition to the books I’ve recommended here, what social security books should be added to our list? Leave the book title and your thoughts in the comments below. 

Thanks for reading…have a great day.