Apr 29, 2023
When using the ssa.tools calculator, you may have noticed a small notch or bump in the income chart when choosing a benefits start date later than the Normal Retirement Age. Here's an example of what this might look like for someone retiring at the age of 68 and 5 months. Initially, the recipient's benefit is $2,258 / mo but in the following January it jumps to $2,392 / mo:
If this is not a bug, what's going on?
When someone chooses to delay collecting social security past the Normal Retirement Age (typically 65), they earn delayed credits that increase their benefit by 6.67% per year (0.56% per month) in exchange for waiting a little longer.
However, due to a little known quirk in the way the credits work, you only earn credits based on the months delayed in the previous calendar year.
In the example image above, the recipient began their benefit in November 2018, so intially the benefit was based only on months delayed in 2017. The additional 10 months of delayed credits were in 2018 and are not yet credited to the recipient. In Jan 2019, those credits kick in and the additional bump in benefits does as well.
There are a few cases where this bump does not appear:
This is not related to Cost of living adjustments (COLA). COLA is also applied in January, but in addition to this rule.
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