I’m 68 and will be 69 on April 2, 2021. If I understand correctly how retroactive payment works, should I wait until October 2, 2021 (6 months after I reach 69 years old) to file for my SS benefit, receive retroactive benefits AND receive the 8 percent additional amount for year 2021?

Hi,

If you apply for your Social Security retirement benefits in October 2021 and claim your benefits retroactive to April 2021, the last month for which you'll receive delayed retirement credits (DRC) is March 2021. And, initially you'll only receive credit for the DRCs you earned through December 2020. The 3 DRCs you'd earn for 2021 (i.e. January, February, March) couldn't be credited until effective with your benefit payment for January 2022. Furthermore, the recomputations to credit partial year DRCs are done automatically by Social Security on a delayed basis, so you probably wouldn't actually receive credit for the 3 DRC months for 2021 until until late in 2022 or 2023. Social Security would pay you any back pay due, however.

For example, say Jack applies for his benefits in October 2021 at age 69 1/2, and he selects to receive benefits retroactive to the month he turned 69, or April 2021. Jack's primary insurance amount (PIA), or full retirement age rate, is $2000. Jack would initially receive credit for 33 DRCs for the months April 2018 through December 2020. DRCs add 2/3rds of 1% to a person's benefit rate for each month that they are not paid benefits from full retirement age (FRA) until age 70. That would increase Jack's monthly benefit rate effective April 2021 to 22% more than his PIA, or $2440 (i.e. $2000 x 1.22). Then, starting with his payment for January 2022, Jack would be due an increase to credit him for the 3 DRCs he earned by not collecting benefits in the first 3 months of 2021. That would increase Jack's benefit rate to 24% more than his PIA, or $2480 (i.e. $2000 x 1.24).

Before deciding when to claim your benefits, 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