How Delayed Retirement Credits Really Work with Social Security (Most People Get This Wrong!)
Jeremy Keil examines the relationship between delaying your Social Security benefits and the delayed retirement credits that come with that decision.
When it comes to retirement, timing is often everything—especially if you’re deciding when to claim your Social Security benefits. One of the most commonly misunderstood tools in the retirement income toolbox is delayed retirement credits. I’ve had many conversations with clients nearing retirement who are either unaware of this benefit or have received incomplete information.
If you’re thinking about delaying your Social Security past your full retirement age, this video is designed to help you make a more confident, informed decision.
What Are Delayed Retirement Credits?
Delayed retirement credits could be construed as a financial reward for waiting to start your Social Security. For every year you delay benefits past your full retirement age (FRA), you get an 8% increase in your monthly benefit. This isn’t just a one-time bonus—this boost lasts for the rest of your life. And if you’re the higher earner in your household, that higher benefit may continue for your spouse after you’re gone.
Even better, this increase doesn’t just accrue annually. You earn delayed retirement credits every month you wait to file. For example, if your full retirement age benefit is $3,000 a month, every month you delay adds about $20 to your future monthly benefit. Wait a full year and that becomes an extra $240 per month. Wait two years and that grows to $480 per month—again, for life.
Why So Much Confusion?
Here’s where it gets tricky—and where even experienced professionals sometimes get it wrong.
Let’s say your full retirement age is 67, and you decide to delay until age 68. You go online to estimate your future Social Security, or you speak to a Social Security representative, and they tell you your benefit is still $3,000. That’s because the Social Security Administration doesn’t apply your delayed retirement credits until the January following the year in which you delay.
That means if you file in August, you’ll start getting the higher payment, but the full value of your delayed credits won’t show up until January. It looks like you’re not gaining anything from waiting, but rest assured—you are. You’ll receive the higher benefit starting the next year, and you’ll keep receiving that increased benefit for the rest of your life.
No, You Won’t Get Back Pay for Waiting
Another common question I hear is, “If I wait eight months, do I get a lump-sum back payment for those delayed credits?”
Unfortunately, no. You begin receiving the increased amount only starting the following January. But that doesn’t mean the delay isn’t worth it.
3 Steps to Help Make the Most of Delayed Retirement Credits
If you’re serious about trying to maximize your Social Security, here are three important pieces of information you should know:
- Know your full retirement age
Your FRA is the age at which you’re eligible to receive your full, unreduced Social Security retirement benefit. This is not the same for everyone—it depends on the year you were born.
- Born 1943–1954: FRA is 66
- Born 1955–1959: FRA increases by 2 months for each year (e.g., if you were born in 1956, your FRA is 66 and 4 months)
- Born 1960 or later: FRA is 67
- Understand how delayed credits accumulate
Don’t be confused by the statements or Social Security’s website. They often include a complete picture of your real benefit until the following January after you’ve delayed. - Coordinate with your spouse and retirement plan
If you’re married, your higher benefit could continue for your spouse after your death. Also, look at how your Social Security decision affects your taxes and your withdrawal strategy from IRAs or 401(k)s.
Final Thoughts
Choosing when to claim Social Security is one of the most important retirement decisions you’ll make. And unfortunately, there are people who leave money on the table simply because they misunderstand how delayed retirement credits work. If you’re relying solely on what your online statement shows, you could be making a costly mistake.
Additional Links:
- Social Security and Work: How Much Can You Make in 2025? – Mr. Retirement YouTube Channel
- https://www.ssa.gov/
Disclosures
Thrivent Advisor Network and its advisory persons do not provide legal, accounting, or tax advice. Consult your attorney or tax professional. Representatives have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration. Jeremy Keil, aka “Mr. Retirement” and Keil Financial Partners offer retirement planning services with a focus on retirement income and tax planning, Social Security and pension claiming decisions, health & life insurance analysis and estate planning strategies. Jeremy Keil and Keil Financial Partners using the trademark name “Mr. Retirement” recognizes that these are not an exhaustive list of all aspects of retirement but are important topics on the financial aspects of retirement planning. The projections or other information generated regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
Keil Financial Partners may utilize third-party websites, including social media websites, blogs and other interactive content. We consider all interactions with clients, prospective clients and the general public on these sites to be advertisements under the securities regulations. As such, we generally retain copies of information that we or third parties may contribute to such sites. This information is subject to review and inspection by Thrivent Advisor Network or the securities regulators. 88 Advisory Persons of Thrivent provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. Keil Financial Partners and Thrivent Advisor Network, LLC are not affiliated companies.
Thrivent and its financial professionals do not provide legal, accounting, or tax advice. Consult your attorney or tax professional. Representatives have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration. Before investing, investors should carefully read the prospectus/summary prospectus. and carefully consider the investment objectives, risks, charges and expenses. All portfolio-level performance shown is hypothetical and for illustrative purposes only. Investor returns will differ from the results shown. The investment funds listed herein are not FDIC insured and shouldn’t be seen as a substitute for money market funds. Increases in interest rates can cause the prices of bonds in the portfolio, and thus. the fund’s share price, to decrease. All distribution yields shown are after all fund related expenses, but before ’s management fee.
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