Hello,

I have attempted to secure an answer on "compounding cola's past age 62" from both the social security department and my congressional representative; none have provided an answer. Kiplinger's ran an article on it in 2015 and logic would dictate that the estimated benefit sent to me every year would be adjusted upward for the COLA's past age 62 even if I did not receive them. Otherwise, with high inflation, the 25% cut one receives when collecting early would be wiped out if the early retiree received the COLA's but not the one who waits for full retirement age (FRA). This question is especially important this year with a 6% COLA predicted. My FRA is Nov 5th. If I begin collecting in on Dec 5th, I would receive a 6% COLA in Jan (no pro-rating of COLA's) that would increase my benefit by $180/mth. Far more than I would realize working until Feb 5th which I am planning to do to earn a bonus. However, if my benefit is adjusted for the 4 COLA's that I am due since FRA of age 62, there is no need to worry, but I can't get confirmation. I have learned about collecting retroactively, so I can claim a Nov 5th start date in Feb, but Social Security couldn't confirm if I would receive the Jan COLA because my phone call was "cut-off" for the end of the day. Anyway, I was hoping that you could help. Thank you for serving under President Reagan. The social security department is another HUGE example of government inefficiency; I could get answers on may small private pension. Thank you in advance for your help.

Hi. You don't need to start drawing your benefits to receive credit for the cost of living (COLA) increase that's expected next year. Your Social Security retirement benefit rate is credited with all Social Security COLAs that occur(red) after your turn age 62 no matter when you apply for your benefits. Social Security calculates your base primary insurance amount (PIA) in the year you reach age 62. That PIA is then updated each year to include COLAs, and those COLAs are compounded. A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA).

For example, say Bob turns 62 in 2022 and his base PIA is calculated at that time to be $1000. Then we'll say that in the following 5 years Social Security COLA's are 5% each year, In that case, by the time that Bob reaches his full retirement age (FRA) of 67, Bob's PIA would have risen to roughly $1217.10 after rounding (i.e. $1000 x 1.05 x1.05 x 1.05 x 1.05 x 1.05).

Bob would also be credited with all COLAs occurring after he reaches FRA, and he could further increase his PIA by working and replacing one or more of the years being used in his PIA computation with a higher year of earnings. And, Bob could also earn delayed retirement credits (DRC) by waiting up until age 70 to start collecting his benefits.

Your best filing strategy depends on many different factors, so you should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully analyze the options available to you in order to determine your best strategy for maximizing your benefits.

Best, Jerry