Delayed Retirement Credits

Delayed Retirement Credits (DRCs) are the additional benefits you earn when you postpone claiming Social Security retirement benefits beyond your full retirement age (FRA). For each year you delay your benefits past your FRA—up to age 70—you receive an increase of about 8% per year. This means if your FRA is 66 and you decide to wait until 70 to start receiving benefits, you could boost your monthly payment by approximately 32%.

For example, if your monthly benefit at age 66 is $1,500, waiting until age 70 could increase that amount to around $1,980. Many people mistakenly believe that waiting isn't worth it, but the cumulative effect of DRCs can lead to significant financial benefits over time, especially if you live longer than average.

It's crucial to consider your health, financial needs, and life expectancy when deciding whether to delay. A common mistake is assuming you will not need the extra income in later years. However, the additional benefits can provide crucial support during retirement when you may face increased healthcare costs or other expenses.

The key takeaway is that waiting to claim your Social Security benefits can substantially enhance your monthly income in retirement. If possible, evaluate your situation and consider delaying your benefits to maximize your financial security in later years.