66 Years Old? Don’t Fall for This Social Security Mistake – It Could Cost You for Life!
Jeremy Keil details a mistake people can make when deciding whether to backdate their Social Security start date.
The Mistake That Nearly Cost My Client Thousands
My client had reached full retirement age (FRA) and was eligible for $3,000 per month in Social Security benefits. Our plan was to delay filing for one full year, which would earn them 8% in Delayed Retirement Credits (DRCs)—an extra $240 per month, every month, for life. That’s $3,240 per month instead of $3,000.
But life happens. My client left their part-time job and needed income sooner than expected. So, six months into the delay, they decided to file.
Here’s where it gets tricky. Social Security lets you backdate your application by up to six months once you’re past FRA. That means you can retroactively start your benefits up to six months earlier and receive a lump-sum payment for those months. Tempting, right?
Why Backdating Can Backfire
Backdating sounds like free money. However, in this case, it would have cost my client thousands. If they had backdated, they would have received six months of benefits retroactively ($18,000 total). But they would have forfeited their delayed retirement credits for those six months—worth $120 per month for life.
And here’s the kicker: that higher benefit from DRCs doesn’t kick in immediately. If you file mid-year, you don’t start receiving the higher payout until January of the following year. That’s an easy detail to miss—and unfortunately, Social Security reps may miss it, too.
The Bad Math Behind the Incomplete Advice
My client explained that a Social Security rep told them: “You’ll get $3,000 per month whether you file now or backdate. So why not take the six months of back pay?” Seems logical on the surface.
But the rep did some sloppy math. They said it would take 75 years to break even if you declined the lump sum and waited for the higher benefit.
Not so fast. Here’s the math actually plays out:
- Lump sum from backdating: $18,000
- Additional monthly income from delaying six months: $120
- Break-even time: $18,000 ÷ $120 = 150 months, or 12.5 years
If you live longer than 12.5 years—and many of us will—you’re actually better off not backdating.
Incomplete Information = Incomplete Planning
Even the Social Security website can be difficult to understand in regards to this situation. Once you reach FRA, the site shows your benefit amount for every upcoming month, but it doesn’t immediately show that your DRCs won’t apply until January of the following year. It lists the same benefit for month after month, making it seem like there’s no reason to wait.
That’s why some retirees decide to file earlier than they should, or assume they’re not earning anything extra by waiting. But you are. You just don’t see it until the following January.
What You Should Do Instead
Before you file—or even think about filing—take these three steps:
- Understand Delayed Retirement Credits
Your benefit grows by 8% per year, or roughly 0.667% per month, between your FRA and age 70. That’s inflation-adjusted income for life. Don’t leave it on the table without a good reason. - Avoid the Backdating Trap
Getting an informed understanding of your longevity can help you feel more comfortable about your backdating decision. If you expect your longevity to be on the shorter end, the maximum return from your Social Security benefit will likely be higher if you choose to backdate. - Get Expert Advice Before You File
Social Security decisions don’t happen in a vacuum. They need to align with your overall retirement income, tax strategy, and lifestyle goals.
Don’t Let Bad Math Ruin a Great Retirement
It’s not about how much you get next month. It’s about how much you get over your entire retirement.
At Keil Financial Partners, we help you put together the full picture—Social Security, taxes, investments, and income planning—so you can potentially avoid mistakes like this and feel more confident about every decision.
If you’re 66 or older and thinking about filing, or if you’ve already filed and want to make sure it was the right move, let’s talk. Visit www.keilfp.com to connect with our team.
Additional Links:
- Social Security and Work: How Much Can You Make in 2025? – Mr. Retirement YouTube Channel
- How Delayed Retirement Credits Really Work with Social Security (Most People Get This Wrong!) – Mr. Retirement YouTube Channel
- https://www.ssa.gov/
Media Disclosures:
Disclosures
This media is provided for informational and educational purposes only and does not consider the investment objectives, financial situation, or particular needs of any consumer. Nothing in this program should be construed as investment, legal, or tax advice, nor as a recommendation to buy, sell, or hold any security or to adopt any investment strategy.
The views and opinions expressed are those of the host and any guest, current as of the date of recording, and may change without notice as market, political or economic conditions evolve. All investments involve risk, including the possible loss of principal. Past performance is no guarantee of future results.
Legal & Tax Disclosure
Consumers should consult their own qualified attorney, CPA, or other professional advisor regarding their specific legal and tax situations.
Advisor Disclosures
Alongside, LLC, doing business as Keil Financial Partners, is an SEC-registered investment adviser. Registration does not imply a certain level of skill or expertise. Advisory services are delivered through the Alongside, LLC platform. Keil Financial Partners is independent, not owned or operated by Alongside, LLC.
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