If I delay retirement 16 months past FRA (which occurred in Dec 2018), I understand the benefit increases about 0.67% per month under the Delayed Retirement Credit rule. So after delaying 16 months, the monthly benefit will increase to 110.7% of the FRA amount stated in Dec 2018......During this 16 months, there are two COLAs amounting to 2.8% for the first year, and 1.6% for the second year. The retiree who elected to not delay their benefits past Dec 2018 will receive both COLAs (roughly amounting to about 4.4%) with no delaying of their benefits. What about the person who delayed? Does the person who delays benefits forfeit any COLAs that occur in the time period when they are delaying?

Hi,

No, no cost of living increases (COLA) are forfeited due to delaying the start of Social Security benefits. People eligible for Social Security retirement benefits receive credit for all of the Social Security COLAs that occur after they turn age 62, regardless of when they choose to start drawing their benefits.

With regard to delayed retirement credits (DRC), I should point out that although you earn delayed retirement credits (DRC) for each month that you decline to draw benefits between full retirement age (FRA) and age 70, you aren't immediately credited with all of the DRCs you've earned unless you claim benefits effective either with a) the month of January, or b) the month in which you reach age 70. If you elect to start your benefits in any other month between FRA and age 70 you are initially only credited with the DRCs that you accrued through December of the year prior to filing. Your benefit rate would then be adjusted effective with the following January to credit additional DRCs for the year of filing.

For example, say Tom reached FRA in June 2018 and files for his benefits effective with August 2019. Although Tom would have earned a total of 14 months of DRCs, he is only credited with 7 DRCs (i.e. June through December 2018) when calculating his benefit rate for the months of August through December 2019 . Then, effective with January 2020, Tom's benefit rate would be adjusted to give him credit for the additional 7 DRC months he earned in 2019 (i.e. January through July).

Furthermore, the benefit adjustments to credit partial year DRCs are not processed immediately. My understanding is that the automated process used to adjust rates for partial year DRCs is only done every other year. So, Tom in the example above may not see the rate increase for his 2019 DRCs until sometime during the year 2021. His increase would be paid retroactively to January 2020, however.

Before you decide on when to start drawing your benefits, you should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to determine the best way to maximize your benefits.

Best, Jerry