Ask Larry: When Would I See The 8% Increase If I Start Social Security Retirement Benefits At 67?

Today’s Social Security column addresses questions about when delayed retirement benefits are applied to benefit payments, when it may be best to take survivor benefits and when it’s possible to receive spousal benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.


When Would I See The 8% Increase If I Start Social Security Retirement Benefits At 67?

Hi Larry, I’ve reached full retirement age and I want to wait until 67 in August to start collecting. Do I see the 8% increase right away or do I have to wait till later to see it? Thanks, Rick

Hi Rick, When a person starts drawing their Social Security retirement benefits between their full retirement age (FRA) and 70, Social Security initially only gives them credit for any delayed retirement credits (DRCs) that they earned through December of the year prior to the year they start collecting. Any additional DRCs earned in the year that the person starts drawing their benefits are subsequently credited effective with their payment for the following January.

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So your benefit rate would increase by 8% if you wait until 12 months after reaching FRA to start drawing your benefits, but you wouldn’t actually be due the full 8% increase until next January. If you start drawing sooner though, you’d receive fewer DRCs and a lower permanent benefit rate.

You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


Should I Wait Until FRA To Start My Survivor Benefits?

Hi Larry, I have been approved by SSA to receive survivor benefits. My FRA is 66. I’m scheduled to start receiving benefits at 65 and four months. I will be working 30 hours a week, and earnings limit is not an issue. My wages will not completely cover my monthly expenses so I will need to withdraw from IRA in that time period. Should I wait the eight months and start collecting the survivor benefits at my FRA of 66? Thanks, Sherry

Hi Sherry, There isn’t enough information in your question for me to be able to give you a proper answer. The best time for you to start drawing survivor benefits depends in large part on how your survivor rate compares to your own Social Security retirement benefit rate. In most cases, you’d want to start drawing the lower benefit as soon as your earnings permit benefits to be paid, and then switch to the other benefit when it reaches its highest rate.

Furthermore, a person’s full retirement age (FRA) for survivor benefits can be as much as four months earlier than their FRA for retirement benefits, so I don’t know whether or not you’re accounting for that. And lastly, the age at which you’d be due your maximum survivor benefit rate depends on whether or not your deceased spouse started drawing their retirement benefits early.

Survivor benefit rates don’t increase if you wait past your survivor benefit FRA to start drawing, but retirement benefit rates keep increasing until 70 if you wait until then to start drawing them. Best, Larry


Am I Entitled To To Collect Spousal Benefit At 63?

Hi Larry, My husband will collecting his Social Security retirement benefit in December. He is 66 and two months. I turned 63 in March. Am I entitled to collect a spousal benefit? Thanks, Jill

Hi Jill, Unreduced spousal benefits are calculated based on 50% of the worker’s primary insurance amount (PIA), and PIAs are the amount that the worker qualifies for if they start drawing at full retirement age (FRA). But you must be at least FRA to be able to qualify for an unreduced spousal benefit.

So if you qualify for spousal benefits and if you start drawing them prior to FRA, your spousal rate will be reduced for age. Furthermore, you can only qualify for spousal benefits if your own PIA is less than 50% of your husband’s PIA. And if you file for benefits prior to FRA and if you’re still working, then some or all of your benefits could be withheld if you earn too much. Best, Larry


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