What Are Delayed Retirement Credits?

Q: What are delayed retirement credits?

A:  You can start Social Security retirement as young as age 62 or wait to a later age. Full retirement age (FRA), sometimes called normal retirement age, is the Social Security Administration term for how old a person must be to receive retirement without age-based reductions. Delayed retirement credits (DRC’s) are increases to a retirement benefit when you delay starting retirement benefits past full retirement age.

DRC increases stop when you reach age 70 even if you continue to delay receiving benefits. There is no additional advantage to putting off Social Security benefits once you reach age 70. 

As with reduced benefits for early retirement, the amount of a delayed retirement credit increase depends on the number of DRC’s involved. The monthly DRC increase for people born in 1943 or later is 2/3 of 1 percent per month for a yearly increase of about 8.0 percent. 

There is no “best age” to start receiving Social Security retirement. It is a very individual decision. Overall, if you live to the average life expectancy for your age, you will receive about the same amount in lifetime Social Security benefits whether you start at age 62, full retirement age, age 70 or any age in between. However, monthly amounts can differ substantially based on your retirement age. You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time. Every choice has advantages and disadvantages but people are more likely to start Social Security retirement when younger. 

Retirement benefits started prior to FRA are referred to as “early” while those started past FRA are “late or delayed.” Part of the Social Security online Retirement Planner; use the “compute the effect of early or delayed retirement” calculator to estimate DRC amounts. Before doing this, estimate your benefit at full retirement age with the Retirement Estimator.