Electing Delayed Social Security Retirement Benefits – Part 1

You can elect to delay receiving Social Security retirement benefits

You can choose to delay receiving Social Security retirement benefits until you are past normal (full) retirement age. Perhaps you want to work longer because you enjoy it, or maybe you want your retirement benefit to be higher when you finally do retire.

Your benefit will be increased by the delayed retirement credit

If you are eligible to receive Social Security retirement benefits but you delay receiving benefits until after normal retirement age, you will be eligible to receive the delayed retirement credit. The delayed retirement credit increases your retirement benefit by a predetermined percentage of your primary insurance amount (PIA) for each month you delay receiving retirement benefits up to the maximum age of 70. The amount of the credit you receive depends upon two factors:

What year you were born

How many months you delayed receiving retirement benefits past normal retirement age.

If you were born in 1943 or later, you will receive 2/3 of 1 percent more per month or 8 percent more per year if you delay receiving retirement benefits. So, for example, if your normal retirement age is 66, and you delay retirement until age 70, your benefit at age 70 will be 32 percent more than it would be at age 66. If your normal retirement age is 67, and you delay retirement until age 70, your benefit at age 70 will be 24 percent more than it would be at age 66.

Tip: Although the delayed retirement credit increases your Social Security retirement benefit, it does not increase your

PIA.

When can it be used?

You must be eligible to receive delayed retirement benefits. In order to receive delayed retirement benefits, you must meet the following criteria:

• You must be at least one month older than normal retirement age, and

• You must be fully insured for retirement benefits (in most cases have 40 quarters of coverage).

You must apply for benefits

Receiving delayed retirement benefits is not automatic. You must apply for benefits when you want to begin receiving them. The Social Security Administration (SSA) recommends that you contact an SSA representative two or three months before you want to begin receiving benefits. You can call the SSA at 1-800-772-1213 for more information.

Strengths

Your retirement benefit will increase if you continue to work past normal retirement age and delay receiving Social Security retirement benefits, you may increase your retirement benefit in two ways. Not only will you receive a delayed retirement credit, but your earnings after normal retirement age may be substantial enough to increase your average indexed monthly earnings (AIME), upon which your benefit is based.

Your surviving spouse’s benefit will increase

If you elect to receive delayed retirement benefits, then die, your surviving spouse (at normal retirement age) may receive 100 percent of the benefit you were receiving. Therefore, if your spouse has a life expectancy substantially greater than your own, you might consider delaying retirement so that your spouse may receive a higher benefit after you die.

Example(s): Mrs. Sprat died of a heart attack at age 71. She had been receiving a monthly delayed retirement benefit of $1,320, which was composed of 100 percent of her primary insurance amount (PIA) ($1,000) plus a 32 percent delayed retirement credit ($320). Therefore, her 66-year-old surviving husband received a monthly retirement benefit equal to 100 percent of the benefit she was receiving at the time of her death. Had Mrs. Sprat retired at her normal retirement age of 66, however, her husband’s survivor’s benefit would have been only $1,000.

Article courtesy of Forefield.Securities offered through NPB Financial Group, LLC. A Registered Investment Advisor/Broker-Dealer Member FINRA, MSRB, and SIPC