• Chris Stein, CFP®

Social Security Claiming Options

Most people can first claim their Social Security retirement benefit at age 62, which is younger than the Full Retirement Age (FRA).  The Social Security Administration (SSA) isn’t too thrilled with folks if they claim their benefit before their FRA, so to encourage people to wait, the SSA allows additional claiming options if they do, like the Delayed Earnings Credit and Retroactive Benefits.

Delayed Earnings Credit

For example, if a man is 68 years old this year, and his full retirement age is 66 (in 2014), he has a couple of SS claiming strategies open to him.  He can opt to use the Delayed Earnings Credit, where his SS benefit would be 16% more than if he filed for it at age 66.

Retroactive Benefits

He can also choose to file for Retroactive Benefits, which work like back pay.  If the man chooses this option, the SSA will send him the last six months of his SS retirement benefit as a lump sum payment and then adjust his future benefits accordingly.  Instead of the 16% more annually he would get from the Delayed Earnings Credit, the man would have a 12% increase in his benefit payment annually plus the 6 months back pay.  The reason for this is that on paper, it would appear as if the man applied for his benefit at age 67 ½, not age 68.

There are advantages and disadvantages to these and other claiming strategies.  To find out more about how Retroactive Benefits work, please use the play button below to listen to our audio post.


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