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Ask the Expert: Deferring Social Security

I’m 64 years old, single and never married. I’d like to defer receiving Social Security until I’m 70. I’ve read that in order to accrue 8 percent annual credits between ages 66 and 70, I must “file and suspend” at age 66; that if I wait to file at age 70, I’ll only be entitled to six months of retroactive payments instead of the 8 percent annual credits. Is this true?

No. All you have to do to accomplish your goal is wait until you’re 70 to apply for your benefit.

As you say, your postponed benefit grows 8 percent a year in delayed retirement credits for up to four years after your full retirement age. The credits accrue on a monthly basis. If you started Social Security at age 67 1/2, for example, your benefit would be 12 percent bigger than at age 66.

Retroactive benefits are for people who’ve delayed their application and opt for a lump sum instead of the largest lifetime benefit. The maximum retroactive payment is for six months. Let’s say you apply at 67 1/2. You can take a benefit that includes all 12 percent of your credits, or one that includes the 8 percent credit you’d have received had you applied six months earlier at age 67, plus a lump sum worth six months of retroactive benefit payments. With Option One, you get a bigger lifetime benefit. With Option Two, you get a lump sum and a smaller lifetime benefit.

To be certain you get what you want, be specific when you apply. Tell Social Security you want a benefit that includes all the credits that have accrued up to your benefit start date, not a lump sum retroactive to an earlier application date.

THE BOTTOM LINE It pays to study all your Social Security options.


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