Delayed Retirement Credits

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
meowcat
Posts: 506
Joined: Wed May 09, 2012 5:46 am

Delayed Retirement Credits

Post by meowcat » Sat May 23, 2020 7:45 am

I just read an article on MSN and I'm not sure I understand this correctly. They say that if wanted to wait past full retirement age, I can get delayed retirement credits, approximately 8% per year. However, If in that time past full retirement age, I'm drawing spousal benefits based on my Wife's working record, delayed credits won't apply, is that true?

https://www.msn.com/en-us/money/retirem ... li=BBnbfcN
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

dharrythomas
Posts: 1030
Joined: Tue Jun 19, 2007 4:46 pm

Re: Delayed Retirement Credits

Post by dharrythomas » Sat May 23, 2020 7:58 am

Yes. If you are drawing based on someone else’s earning history there is no credit for waiting past full retirement.

User avatar
Topic Author
meowcat
Posts: 506
Joined: Wed May 09, 2012 5:46 am

Re: Delayed Retirement Credits

Post by meowcat » Sat May 23, 2020 7:59 am

I did not know that, thank you.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

Ron
Posts: 6622
Joined: Fri Feb 23, 2007 7:46 pm
Location: NY-NJ-PA Metropolitan Statistical Area

Re: Delayed Retirement Credits

Post by Ron » Sat May 23, 2020 9:17 am

The article is a bit misleading, even though I'm sure it wasn't intended.

As an example, my wife/me took advantage of the old file/suspend/delay process, but it still applies today under the current rules when filing against a spousal record.

When my wife started getting SS benefits based upon my FRA amount when she turned age 66 (her FRA), there was no 8% annual increase in years in which she turned 67, 68, 69, 70. However, my future benefit increased by 8% (based upon my FRA benefit) during the years I turned age 67, 68, 69, 70. In that manner, the article is correct because she was receiving income based upon my FRA record, not hers. She could not "earn" DRC's based upon a benefit paid to her based upon my record.

When she turned age 70, she filed for her age 70 benefit, and her SS income based upon my SS record ceased. She received her age 66 FRA benefit, increased by an 8% adjustment for each of the four years (not cumulative). In this case, the increase was awarded against her record, not mine.

At the same time (we're the same age), my suspension ceased and I started getting my SS FRA benefit, increased by 8% for the years I turned 67, 68, 69, 70 (again, not cumulative but a 32% increase over the base FRA amount).

Of course in both cases, any annual COLA was also received (if available).

At age 70, each of us received the maximum amount allowed based upon our earnings record.

You do eventually get DRC's; but only on your own record - not a spousal benefit.

- Ron

User avatar
Topic Author
meowcat
Posts: 506
Joined: Wed May 09, 2012 5:46 am

Re: Delayed Retirement Credits

Post by meowcat » Sat May 23, 2020 12:32 pm

Hi, Ron, thanks for the details, but I'm still a bit confused. It appears that you are saying that your Wife received no 8% increase from 67, 68, 69 and 70, but then in another sentence you said she did. I'm just trying to figure out if the article was correct because I've never heard that before. Thanks.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

Ron
Posts: 6622
Joined: Fri Feb 23, 2007 7:46 pm
Location: NY-NJ-PA Metropolitan Statistical Area

Re: Delayed Retirement Credits

Post by Ron » Sun May 24, 2020 6:41 am

meowcat wrote:
Sat May 23, 2020 12:32 pm
Hi, Ron, thanks for the details, but I'm still a bit confused. It appears that you are saying that your Wife received no 8% increase from 67, 68, 69 and 70, but then in another sentence you said she did. I'm just trying to figure out if the article was correct because I've never heard that before. Thanks.
She did not receive the 8% per year while she was claiming against my benefit from age 67 on. However, she did receive the DRC's when she claimed her benefit at age 70.

The key is to who's benefit the SS spousal claim is against. If you/spouse are receiving a spousal benefit, you don't get the DRC's. However, at age 70 (when you claim your own benefit), you do get the accrued DRC's for the years in which you delayed receiving your benefit.

The confusion could be related to the idea that when you are receiving a spousal benefit it is a claim against your own SS file. It isn't. Your SS record/file does not come into play until you claim against your own personal SS record at age 70.

- Ron

MrJedi
Posts: 45
Joined: Wed May 06, 2020 11:42 am

Re: Delayed Retirement Credits

Post by MrJedi » Sun May 24, 2020 7:17 am

Ron wrote:
Sun May 24, 2020 6:41 am
meowcat wrote:
Sat May 23, 2020 12:32 pm
Hi, Ron, thanks for the details, but I'm still a bit confused. It appears that you are saying that your Wife received no 8% increase from 67, 68, 69 and 70, but then in another sentence you said she did. I'm just trying to figure out if the article was correct because I've never heard that before. Thanks.
She did not receive the 8% per year while she was claiming against my benefit from age 67 on. However, she did receive the DRC's when she claimed her benefit at age 70.

The key is to who's benefit the SS spousal claim is against. If you/spouse are receiving a spousal benefit, you don't get the DRC's. However, at age 70 (when you claim your own benefit), you do get the accrued DRC's for the years in which you delayed receiving your benefit.

The confusion could be related to the idea that when you are receiving a spousal benefit it is a claim against your own SS file. It isn't. Your SS record/file does not come into play until you claim against your own personal SS record at age 70.

- Ron
I thought this was not possible with the 2015 changes for those born in 1954 and later. I believe you cannot file your own and spousal benefits separately anymore. If you file at 67 and end up with spousal benefits, you don't get the delay credits for your self benefits anymore. So at that point you would just get whichever benefit is higher and end up sticking with it. If your self benefit with delay credits at age 70 is larger than spousal benefits at 67, you now need to pick one or the other, not both.

Ron
Posts: 6622
Joined: Fri Feb 23, 2007 7:46 pm
Location: NY-NJ-PA Metropolitan Statistical Area

Re: Delayed Retirement Credits

Post by Ron » Sun May 24, 2020 7:32 am

Well that s*c*s :evil:

- Ron

User avatar
Eagle33
Posts: 637
Joined: Wed Aug 30, 2017 3:20 pm

Re: Delayed Retirement Credits

Post by Eagle33 » Sun May 24, 2020 11:48 am

Ron wrote:
Sun May 24, 2020 7:32 am
Well that s*c*s :evil:

- Ron
But that reduces the confusion for those born 1954+. :|
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.

User avatar
Topic Author
meowcat
Posts: 506
Joined: Wed May 09, 2012 5:46 am

Re: Delayed Retirement Credits

Post by meowcat » Mon May 25, 2020 10:39 am

Ron wrote:
Sun May 24, 2020 6:41 am
meowcat wrote:
Sat May 23, 2020 12:32 pm
Hi, Ron, thanks for the details, but I'm still a bit confused. It appears that you are saying that your Wife received no 8% increase from 67, 68, 69 and 70, but then in another sentence you said she did. I'm just trying to figure out if the article was correct because I've never heard that before. Thanks.
She did not receive the 8% per year while she was claiming against my benefit from age 67 on. However, she did receive the DRC's when she claimed her benefit at age 70.

The key is to who's benefit the SS spousal claim is against. If you/spouse are receiving a spousal benefit, you don't get the DRC's. However, at age 70 (when you claim your own benefit), you do get the accrued DRC's for the years in which you delayed receiving your benefit.

The confusion could be related to the idea that when you are receiving a spousal benefit it is a claim against your own SS file. It isn't. Your SS record/file does not come into play until you claim against your own personal SS record at age 70.

- Ron
Okay, maybe it's me. You said it again. She didn't, and then she did. Still confused.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

User avatar
Topic Author
meowcat
Posts: 506
Joined: Wed May 09, 2012 5:46 am

Re: Delayed Retirement Credits

Post by meowcat » Mon May 25, 2020 10:44 am

delete
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

User avatar
Eagle33
Posts: 637
Joined: Wed Aug 30, 2017 3:20 pm

Re: Delayed Retirement Credits

Post by Eagle33 » Mon May 25, 2020 7:57 pm

As I understand it, DRCs are applicable only on your work history based benefits, not benefits based on your spouse. Of course survivor benefits is the possible exception.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.

User avatar
Topic Author
meowcat
Posts: 506
Joined: Wed May 09, 2012 5:46 am

Re: Delayed Retirement Credits

Post by meowcat » Tue May 26, 2020 2:04 pm

After further research, I now have a better understanding of DRC's for spousal benefits. As Ron said, the article is a bit (very) misleading.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson

Post Reply