Delayed-retirement credits increase Social Security benefits each month after you reach full retirement age (66 for those born between 1943 and 1954). If you accumulate the maximum credits by waiting until age 70, your first check will be for the full amount of those credits.
If you claim your benefits prior to age 70, the size of the first check will be less and it won’t include the full power of the credits you’ve earned. Your disappointment over a smaller benefit check won’t last forever. Each month after your full retirement age that you postpone receiving benefits earns you a credit of 2/3 of 1% of your benefit. That’s an 8%-a-year increase. Credits start the month you hit full retirement age and end no later than the month before you hit age 70. Therefore, those with a full retirement age of 66 can earn a maximum boost of 32%. If you delay until you have the whole 32%, you’ll get the full credit for the boost in your first check at age 70.
However, if waiting to age 70 isn’t going to work for you, whenever you claim, you’ll get the delayed credits earned up to that point. This means some of your credits won’t be effective until later. The credits aren’t part of the benefits until the January after the credits are earned, if you claim before age 70. As a result, if you take your boosted benefit in your late sixties, all credits earned in previous calendar years will be included in your first check. However, credits earned in the current year won’t count until the next January.
Don’t let the details cloud the value of delaying your claim. Social Security is an inflation-adjusted income that won’t be outlived, so the larger the initial benefit, the better. This is especially important, if you or a spouse are expected to live a long time.
It’s the higher earner’s benefit that lasts the lifetime of the surviving spouse for couples. Upping the size of the benefit that remains for the survivor can help with losing the smaller benefit, which goes away when the first spouse passes.
Singles who can wait until age 70, can be assured of guaranteed income if they live well into their eighties or nineties.
Reference: Kiplinger (February 2017) “Why Your First Social Security Check May Be Smaller Than Expected”