How Delayed Retirement Credits (DRCs) Affect Your Social Security Benefits

I have a question about starting retirement benefits after FRA. I understand that if someone turns 68 in February 2023 and they start benefits any time after FRA month in 2023, then the monthly benefit amount will not increase for DRCs. Individual will only receive his/her PIA. For example, if you delayed the start date from February to August, you should have a 4% increase, $3,120 vs. $3,000. How exactly is the extra $120/month paid out?

Delayed Retirement Credits (DRCs) earned after reaching Full Retirement Age (FRA) do indeed increase your Social Security benefit, but there’s a specific way this is handled:

1. How DRCs Are Applied:

   • DRCs Earned in 2023: If you turn 68 in February 2023 and delay the start of your benefits beyond your FRA, any Delayed Retirement Credits you earn in 2023 will be reflected in your January 2024 benefit payment, which you’ll receive in February 2024. This means your benefit amount will increase by 4% (or $120 in your example).

2. No Back Pay for 2023:

   • Adjustment in 2024: You won’t receive back pay for the months in 2023 when DRCs weren’t included in your payments. The increase only takes effect starting in January of the following year, so the higher amount is paid from that point onward.

In summary, while your benefits will increase due to DRCs, the additional amount only starts in January of the next year. You won’t receive back pay for the higher amount in the months you delayed within the same year.

The content on this blog is for informational purposes only and is not legal, financial, or professional advice. Social Security rules change periodically, so some information may become outdated. For the most accurate advice, consult a certified National Social Security Advisor (NSSA®). Social Security Professionals, LLC, and NSSA® are not responsible for any errors, omissions, or actions taken based on this blog's content. Use of this blog does not create a client relationship, and all information is provided "as is" without guarantees. By using this blog, you agree to hold Social Security Professionals, LLC, and NSSA® harmless from any claims or liabilities arising from its content. For personalized guidance, contact an NSSA® professional.