Understanding Delayed Retirement Credits (DRCs)
For every month you delay claiming Social Security benefits past your Full Retirement Age (FRA), you earn Delayed Retirement Credits (DRCs). These credits permanently increase your monthly benefit. This incentive continues until you reach age 70, at which point it is no longer beneficial to wait. For those born in 1943 or later, the annual increase is 8%, meaning you can significantly boost your income simply by waiting.
The Social Security Administration calculates your benefit based on your 35 highest-earning years. Working longer can further increase your benefit in two ways. First, if your current earnings are higher than one of your past 35 years, they can replace a lower-earning year in the calculation, raising your overall average. Second, by delaying benefits and working, you are not drawing from your Social Security while you save and invest.
How DRCs are Calculated
- Monthly accrual: For those born after 1943, delayed retirement credits are earned at a rate of two-thirds of 1% for each month you delay.
- Annual percentage: This amounts to an annual increase of 8% for every year you wait beyond your Full Retirement Age, up to age 70.
- Timing of payment: DRCs are applied and begin to increase your benefit at the point you start receiving payments. However, they stop accumulating at age 70, making that the maximum age to start claiming,.
- Permanent increase: Unlike cost-of-living adjustments (COLAs), which are applied to all Social Security recipients, DRCs create a permanently higher base benefit amount for the rest of your life.
The Age Factor: Early vs. Full vs. Delayed Claiming
Your claiming decision is one of the most critical factors influencing your Social Security income. The timing dramatically affects the size of your monthly payment and your potential lifetime benefits.
- Early claiming (age 62): You can begin receiving benefits as early as age 62, but they will be permanently reduced. For those born in 1960 or later, claiming at 62 results in a 30% reduction compared to your full retirement benefit.
- Full Retirement Age (FRA): This is the age at which you can receive 100% of your primary insurance amount (PIA), a benefit calculated from your earnings history. For those born in 1960 or later, the FRA is 67.
- Delayed claiming (until age 70): By waiting past your FRA, your benefit continues to increase annually by 8% until age 70. This can result in a monthly payment up to 32% higher than your FRA benefit.
Comparing Social Security Claiming Scenarios
| Claiming Age | Monthly Benefit Impact (FRA 67) | Lifetime Benefit Strategy | Key Considerations |
|---|---|---|---|
| Age 62 (Early) | Permanent 30% reduction. | More years of receiving payments, but at a lower monthly rate. | Ideal for those with a shorter life expectancy or immediate need for income. |
| Full Retirement Age (FRA) | 100% of your Primary Insurance Amount (PIA). | Balances benefit amount with the number of years you collect. | A standard option for many retirees, providing full, unadjusted benefits. |
| Age 70 (Delayed) | Up to 32% more than FRA amount for those born in 1960 or later. | Higher monthly payments for life, though for fewer years. | Best for those with a long life expectancy, solid health, and a financial ability to wait. |
Other Factors Influencing Your Social Security at Age 70
Beyond the delayed retirement credits, other factors can boost your benefit at age 70:
- Working beyond FRA: If you continue to work in your 60s, your higher income in later years can replace lower-earning years in the 35-year calculation, leading to a larger monthly check. Once you reach your FRA, there are no limits on how much you can earn while collecting benefits.
- Cost-of-Living Adjustments (COLAs): The higher base benefit you lock in at age 70 will be further enhanced by annual COLAs. These adjustments are designed to help your benefits keep pace with inflation.
- Spousal and Survivors Benefits: If you are married, your decision to delay benefits can also increase the potential survivor benefits for your spouse. A higher earning spouse delaying their benefits can leave their survivor with a significantly larger monthly payment,.
The decision-making process
Deciding when to claim Social Security is a complex personal decision. While waiting until 70 offers the highest possible monthly benefit, it is not the right choice for everyone. You should consider your personal financial situation, your health and estimated life expectancy, and any other sources of retirement income. If you have significant savings and can afford to delay, maximizing your monthly Social Security check by waiting until 70 can provide valuable financial security throughout your later years. Conversely, if you need the income sooner or have health concerns, claiming earlier might be the most practical option. Using the Social Security Administration's online tools can provide personalized estimates to help you make an informed choice.
Conclusion
In summary, the answer to "Do you get more money when you turn 70?" is a definitive yes, because it is the latest age you can accumulate Delayed Retirement Credits. Waiting until 70, assuming you are in good health and can manage financially, is the single most effective strategy to maximize your monthly Social Security payments for the rest of your life. However, this strategy must be considered alongside your personal circumstances, including health, life expectancy, and other financial resources. A higher monthly check at age 70 offers inflation protection and can improve the financial security of a surviving spouse. Ultimately, understanding how delaying benefits works and its impact on your retirement income is crucial for making the best financial decision for your future.
