Social Security claiming can be confusing. Many people know that if you wait until age 70 to start collecting Social Security benefits, you can lock in a higher monthly check—thanks to something called Delayed Retirement Credits (DRCs). For every year you wait beyond your Full Retirement Age (FRA) (which is usually around 66 or 67), your benefit increases by about 8%—all the way up to age 70.
This increase can be a big win, especially for higher earners and those with longer life expectancies. That’s why many smart retirees choose to delay claiming —even if they stop working before 70.
Using tools like IFG’s Savvy Social Security Planning Calculators, we can show exactly how much you stand to gain, including the effect on spousal and survivor benefits.
But here’s what most people don’t realize: There are some important details about how and when these delayed credits are actually added to your benefit.
The Math Behind the 8% Increase
When financial professionals say you get “8% more per year” by delaying Social Security, they’re simplifying the math. Here’s what’s really going on:
- DRCs are credited monthly—at 5/9 of 1% per month (which equals 8% per year).
- These credits apply to the months between your Full Retirement Age and when you start collecting.
Let’s say your Primary Insurance Amount (PIA) is $3,000 (this is your benefit at FRA), and your FRA is age 67. If you wait until 70 to claim, you’ll get $3,000 × 1.24 = $3,720 per month, not including cost-of-living adjustments (COLAs).
That 24% increase is from 3 full years of delayed credits (8% x 3 years). Important: Delayed credits are not compounded. You earn a simple increase of 8% per year.
Timing Really Matters
If you apply at age 70 (or up to 3 months before), all your delayed credits will be fully included in your first check. But if you file before 70—even just by a few months—things work differently.
Let’s look at an example:
Bob has a PIA of $3,000 and plans to wait until 70, but changes his mind and files at age 68, in July. His first Social Security check (in August) won’t include all his delayed credits yet.
Here’s why:
- Social Security only adds delayed credits once a year, in January.
- When Bob files, his benefit will include only the DRCs earned up through the previous year. So he gets $3,000 × 1.08 = $3,240 per month
That’s only one year of delayed credits. The six months he earned in the current year (January–June) will be added later—next January.
At that point, Bob’s benefit will increase again to $3,360 per month, plus he’ll get a lump sum of $240 for the retroactive increase.
COLA adjustments and income-based changes (if he’s still working) are calculated separately and automatically.
The Bottom Line: Know the Rules Before You Claim
If you’re looking to maximize your Social Security benefits, it’s critical to understand not just how much you’ll get—but when and how it’s calculated. The timing of your filing can affect more than just your monthly check—it can impact lifetime income, spousal benefits, and retirement income planning.
The Social Security Administration has automated most of these adjustments, but that doesn’t mean your strategy should be left to guesswork.
Want Help Deciding When to Claim?
Social Security optimization and tax-managed retirement income planning is my specialty. If you’re between the ages of 55 and 70 and want to make a smart, tax-efficient choice about your benefits, let’s begin!
