Understanding the Mechanisms of Benefit Growth
For most retirees, there is a common misconception about how Social Security benefits grow over time. While the idea of a lump-sum increase at a specific age like 75 is appealing, the system works through two primary and distinct mechanisms: delayed retirement credits and Cost-of-Living Adjustments (COLAs). Your benefits may seem to increase at 75, but this is a result of these long-standing rules, not a new rule taking effect at that specific age.
Delayed Retirement Credits (DRCs): How Waiting Pays Off Until 70
Delayed Retirement Credits (DRCs) are a powerful incentive for those who can afford to wait to claim their benefits. For each month you delay claiming benefits past your full retirement age (FRA), up to age 70, your monthly payment increases. This credit adds up to 8% per year for each full year you delay, creating a significant and permanent boost to your monthly check for the rest of your life. For individuals born in 1960 or later, whose FRA is 67, delaying until 70 provides an extra 24% on top of their full retirement benefit.
Here’s the crucial point concerning the question: You stop accumulating these DRCs when you reach age 70. So, while delaying until 70 maximizes your initial benefit amount, the benefit itself does not continue to increase from this mechanism after your 70th birthday. By age 75, your DRCs are fully baked into your benefit, providing a higher starting point for all subsequent increases.
Cost-of-Living Adjustments (COLAs): The Annual Inflation Hedge
Unlike DRCs, Cost-of-Living Adjustments (COLAs) are an ongoing feature for all Social Security recipients, regardless of their age. A COLA is an annual percentage increase designed to help your benefits keep pace with inflation, protecting your purchasing power over time. The Social Security Administration (SSA) announces the COLA for the coming year every October, and the increase takes effect in January.
The COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Since the COLA applies to your entire benefit amount, any permanent increases you earned from delayed retirement credits up to age 70 are factored in, leading to a higher dollar-value increase from each COLA.
For example, if the average retired worker benefit receives a 2.5% COLA, someone with a higher base benefit from delaying until age 70 will see a larger absolute dollar increase than someone who claimed at their FRA. This is the main reason why a person's Social Security check continues to increase after age 75.
How a Beneficiary's Payments Grow Past 70
Consider two retirees, both with the same work history and base benefit, but different claiming strategies. One claimed at full retirement age (FRA), while the other delayed until age 70. Both will receive the annual COLA, but the delayed claimant's base is permanently higher due to the DRCs. This difference persists and is compounded by each subsequent COLA, resulting in a higher payment at age 75 and beyond for the person who delayed.
Here is a step-by-step illustration of how benefits grow for someone past age 70:
- A retiree's benefit is permanently set based on their claiming age (anywhere from 62 to 70), which locks in any early reductions or delayed credits.
- Starting at age 71, and every year thereafter, this base amount is increased by the annual Cost-of-Living Adjustment.
- At age 75, the retiree receives a benefit that includes the permanent increase from their delayed credits (if any) plus the compounding effect of all COLAs since they turned 70.
- There is no special 'bump' or additional credit applied specifically at age 75.
A Comparison of Claiming Strategies
To better illustrate the effect of timing, let's compare two individuals with a Full Retirement Age of 67 and a Primary Insurance Amount (PIA) of $2,000.
| Feature | Claiming at Full Retirement Age (67) | Claiming at Age 70 |
|---|---|---|
| Initial Benefit | 100% of PIA ($2,000) | 124% of PIA ($2,480) |
| Delayed Credits | None | 24% permanent increase |
| Benefit at 75 | Original PIA + 8 years of COLA increases | Initial benefit at 70 + 5 years of COLA increases |
| Total Lifetime Benefits | Will reach break-even point earlier, but accumulate less overall, especially with a long life expectancy | Takes longer to reach break-even point but significantly higher monthly payments from 70 onward |
The Longevity and Health Factors
For those wondering if social security increase at 75, the real consideration should be long-term financial security. By age 75, many seniors have a clearer picture of their health and longevity. Those with longer life expectancies often benefit most from delaying benefits to age 70, as the higher monthly payments for life outweigh the shorter period of collecting a smaller check. For others, particularly those with health concerns, claiming earlier might be the better choice.
It is important to remember that delaying past 70 provides no further increases through DRCs. The SSA automatically begins paying benefits at age 70 if you haven't started collecting them. For more details on retirement benefit planning, see the SSA's Official Retirement Benefits Information.
Summary: The Final Word on Your 75th Birthday
While a cake and celebration are in order for your 75th birthday, a special Social Security increase is not. Your payments will continue to rise annually due to inflation-based COLAs, and they will be higher if you previously earned delayed retirement credits by waiting to claim. The myth of an increase at 75 is likely a result of witnessing the ongoing effects of these established rules, not a new age-specific rule. A higher benefit at 75 is a testament to savvy financial planning in the years leading up to it, combined with the government's effort to keep payments in line with the cost of living.
