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Social Security - Delayed Retirement Credits

Most people are familiar with the potential drawbacks of receiving benefits before they reach full retirement age (FRA). But only some people are familiar with all the potential benefits of waiting beyond FRA to receive social security benefits. Each month you postpone benefits past the month you turn 67 (assumed FRA), you can earn an additional .67% a month, or 8% a year, until you reach age 70.

For example, let's assume you are eligible to receive your primary insurance amount of $2,000 per month if you wait until you reach 66 (FRA). If you decide to wait until age 70 or any year up to age 70, you will receive an increase of 8% for each deferred year. The 8% return is guaranteed and cost-of-living adjusted. You would be entitled to receive at age 70 $2,640 per month or $31,680 a year.

There are various factors to consider whether waiting beyond full retirement age to file for benefits is the right choice for you, but in most cases, the "break-even" point is somewhere around a person's life expectancy. It, therefore, becomes a personal wager to outlive your life expectancy. However, a critical aspect that gets overlooked in the decision is the increased survivor benefit available to your surviving spouse if you wait as long as possible to begin receiving retirement benefits. Using the above example, assume your spouse's retirement benefit is only $1,200 because of low earnings or being non-employed for several years (i.e., homemaker). If you "pass away" before your spouse and wait until age 70 to receive your benefits, your spouse's monthly benefit would increase from $1,200 to $2,640 for their lifetime (see above chart).

At Carr Wealth Management, LLC, anyone who sets goals for themselves qualifies to be a client. Whether you need help creating a comprehensive financial plan or need advice on individual matters, we can help.  Choosing the best strategy for maximizing social security benefits is essential to planning for your future. Please contact us by email or phone us at (925) 484-1671 to schedule a no-charge consultation or if you have a question about Social Security Benefits. 


Click Here for the Main Social Security Page


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