My Social Security statement shows what my maximum benefit will be if I don’t start taking it until I’m 70. Does this assume I’ll keep working work full time, at full salary, until 70? If not, would my benefit at 70 be even bigger if I continued working from age 66 to age 70?
No matter when you stopped working, your starting benefit at 70 would be bigger than at 66. The reason: The increase is due to Delayed Retirement Credits (DRCs) — a bonus for postponing your benefit after you reach full retirement age.
DRCs boost your benefit 8 percent a year for up to four years of delay. If your benefit at 66 is $2,000, for example, but you wait four years to take it, your starting benefit at 70 is $2,640, plus any inflation adjustments during those four years.
If your goal is to receive the maximum monthly lifetime benefit, state clearly when you apply for Social Security that you want your benefit to include all the DRCs that have accrued between your 66th birthday and your benefit start date. (The alternative is to receive a lump-sum payment for six months of retroactive benefits, and the smaller monthly benefit check you’d have received had you applied six months earlier.)
So will your starting benefit be even more if you work until 70? Maybe. The calculation that determines your benefit is based on your 35 highest-paid working years. If your earnings between 66 and 70 are big enough to replace four lower-earning years in that 35 year record, they will increase the size of your benefit at 70.
THE BOTTOM LINE Regardless of when you stop working, waiting until you’re over your full retirement age to start collecting Social Security benefits will boost your benefit.
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