SLEDGE: Can I get additional money by waiting?

Q: I know that if I start getting my Social Security before I’m 66, I’ll take a cut in my benefits. But I’ve heard that if I wait until sometime after I’m 66 to start, I’ll get more than the full amount. Is that true?

A: It is. Assuming from your question that your full retirement age is 66 (as it is for everyone born from 1943 through 1954), then that’s when you’ll have to wait to have your retirement benefits start if you want to receive the full, unreduced amount. Regardless of your full retirement age, though, you can still choose to have your entitlement begin as early as age 62. Most folks understand that early entitlement results in a reduction in benefits. This reduction is about six percent a year, so for those with a full retirement age of 66, starting benefits at 62 means about a 25 percent cut in payments. What many folks are unclear about, however, is that a sort of mirror image of this process occurs when entitlement is delayed until after full retirement age. Then, instead of a reduction, you get an increase. This increase is known as Delayed Retirement Credits, or DRCs.

You earn one DRC for each month that you defer entitlement until after your full retirement age. For those born in 1943 and later, each DRC increases the full benefit by two-thirds of a percent, up to the age of 70. Two-thirds of a percent per month comes to eight percent a year. So if your full retirement age is 66, and you wait until you’re 67 to start getting Social Security retirement benefits, you’ll receive an amount equal to 108 percent of the full benefit. At 68 you’d get 116 percent; at 69, 124 percent; and at age 70, you’d get a benefit equal to 132 percent of the amount payable at age 66. That’s a permanent increase, payable for the rest of your life.

Here’s an example. A worker born between 1943 and 1954 whose unreduced benefit is $1,600 will get that amount each month if he begins his entitlement at his full retirement age of 66. If he starts benefits at age 62, he’ll receive a monthly benefit of about $1,200. And if he waits until age 70, he’ll get about $2,112 a month. Note that there are 96 months between ages 62 and 70, and each one yields a different benefit amount — less than 100 percent for those months under 66, more than 100 percent for those months over 66.