Q&A: How delayed Social Security retirement credits work

Dear Liz: I just got off the phone with the Social Security folks and they told me the 8% delayed retirement credit is based on your benefit at full retirement age, rather than an 8% increase every year based on the previous year’s amount. So, if my full retirement age benefit was $3,000, my benefit increases $240 each year, not $240 the first year and $259 the second year and $279.94 the third year. Is that your understanding?

Answer: Yes. Delayed retirement credits don’t compound. If there are three years between your full retirement age and age 70, when your benefits max out, you will get 24% more than if you had applied for Social Security at your full retirement age.

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