SS Delayed Credits Timing

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vested1
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SS Delayed Credits Timing

Post by vested1 »

Not wishing to hijack a recent thread I'd like to ask a couple of questions as to the timing of my SS filing. I've read numerous other threads in the past and have searched on the SS website and am still unclear. I turn 70 on July 2nd of 2022 and am currently using a restricted application, receiving 1/2 of my wife's PIA since I turned 66 (FRA). Circumstances may lead me to file at 69.5 and if I do I would like to know what to expect, and alternatively, how and when delayed credits are applied in the following situations.

1. If I wait to file for my maximum benefit, my understanding is that I would file in May of 2022, asking for benefits to begin in July, with my first check arriving on the 2nd Wednesday of August 2022. Will all of my delayed credits be applied on the 1st check, or will I have to wait until January 2023 for the additional credits from 1/22 to 7/22 to be applied, with a lump sum check to cover those credits and an ongoing increase in my benefit?

From SS, which is confusing to me. Prior threads seem to contradict this statement:

https://www.ssa.gov/OP_Home/cfr20/404/404-0313.htm
(2) Credits earned after entitlement in the year of attainment of age 70. If you are entitled to benefits in the month you attain age 70, we examine our records to determine if you earned any additional delayed retirement credits during the calendar year in which you attained age 70. Any increase in your benefit amount is effective beginning with the month you attained age 70.

2. If I want my first check to arrive in January 2022 I would need to file in October of 2021, starting benefits in December of 2022. Would I get credit for 69.5 years of delay or 1 month less, and would it be applied to the 1st check in January of 2022?

3. If I filed in November 2021 to start benefits in January 2022, getting my 1st check in February 2022, would that 1 month (January 2022) delayed credit be applied on January 2023 or immediately applied because it is the year I turn 70?

Thanks in advance.
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Re: SS Delayed Credits Timing

Post by retired@50 »

Due to the intricacy of your question, I'd suggest you send a PM to Mike Piper, aka The Oblivious Investor here on Bogleheads.

I suspect he knows the answer right off the top of his head.

See links:
viewtopic.php?t=68019

https://www.bogleheads.org/wiki/Mike_Piper

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: SS Delayed Credits Timing

Post by FactualFran »

vested1 wrote: Thu Sep 09, 2021 7:09 am [ommited for brevity]
Answer to questions in the opening post:

1. If you start benefits with the one for 2022-07 (age 70), the initial benefit payment (paid 2022-08) should include 48 months of delayed retirement credits (DRC). According to the quote in the opening post from the Code of Federal Regulations that applies in this case: "Any increase in your benefit amount is effective beginning with the month you attained age 70."

2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."

3. If you start benefits with the one for 2022-01 (age 69 years 6 months), the initial benefit (paid 2022-02) should include 42 months of DRC (30 months as in the answer for the previous question plus 12 months of delay during 2021).
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Re: SS Delayed Credits Timing

Post by vested1 »

retired@50 wrote: Thu Sep 09, 2021 10:05 am Due to the intricacy of your question, I'd suggest you send a PM to Mike Piper, aka The Oblivious Investor here on Bogleheads.

I suspect he knows the answer right off the top of his head.

See links:
viewtopic.php?t=68019

https://www.bogleheads.org/wiki/Mike_Piper

Regards,
I tried that but apparently he doesn't accept PM's. I might be wrong though.
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vested1
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Re: SS Delayed Credits Timing

Post by vested1 »

FactualFran wrote: Thu Sep 09, 2021 11:51 am
vested1 wrote: Thu Sep 09, 2021 7:09 am [ommited for brevity]
Answer to questions in the opening post:

1. If you start benefits with the one for 2022-07 (age 70), the initial benefit payment (paid 2022-08) should include 48 months of delayed retirement credits (DRC). According to the quote in the opening post from the Code of Federal Regulations that applies in this case: "Any increase in your benefit amount is effective beginning with the month you attained age 70."

2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."

3. If you start benefits with the one for 2022-01 (age 69 years 6 months), the initial benefit (paid 2022-02) should include 42 months of DRC (30 months as in the answer for the previous question plus 12 months of delay during 2021).
Your answer aligns with what I was expecting. Basically, any filing prior to age 70 will result in a delay of full credits until the following January (2023). The initial additional income, even if it's only 30 months for 2022 would be a substantial raise in fixed income. That being said, it is much less of an issue if I simply wait until May 2022 to file for maximum benefits to begin in August 2022.

I may be a victim of my own over-analyzation however. I look at a possible COLA of +5% in SS benefits next year and tend to rationalize an earlier filing. A 4% increase for waiting another 6 months for the maximum benefit on top of the projected COLA is compelling.

I am a stickler for words, and the wording of the linked SS reference seems to have been misinterpreted by others. Other threads have had comments which said that even if you waited to begin benefits until age 70, unless you were born in January you wouldn't have all of your credits applied until the following January. If Mike Piper chimes in the answer will be set in stone, and will hopefully help someone else with the same question. (Not that I don't trust your answer).
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Re: SS Delayed Credits Timing

Post by Chip Munk »

FactualFran wrote: Thu Sep 09, 2021 11:51 am 2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."
So if the OP starts benefits in Dec 2021, that initial payment will not include the 11 months of DRCs earned through Nov 2021. Would the OP eventually receive a lump sum payment for the difference? The sentence you quoted implies they do not "make you whole". Am I understanding correctly? I may be filing for my benefit to begin in Dec 2021 as well, so I'm curious what I should expect.
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Re: SS Delayed Credits Timing

Post by ObliviousInvestor »

vested1 wrote: Thu Sep 09, 2021 2:25 pm
retired@50 wrote: Thu Sep 09, 2021 10:05 am Due to the intricacy of your question, I'd suggest you send a PM to Mike Piper, aka The Oblivious Investor here on Bogleheads.

I suspect he knows the answer right off the top of his head.

See links:
viewtopic.php?t=68019

https://www.bogleheads.org/wiki/Mike_Piper

Regards,
I tried that but apparently he doesn't accept PM's. I might be wrong though.
Somebody emailed me about this thread. I don't accept PMs because I always forget to delete them, and then the inbox fills up and because if I go on vacation people wonder why I didn't reply (whereas I'd have an autoresponder for email). My email address is public though, and Bogleheads are always welcome to reach me there -- mike@obliviousinvestor.com.
vested1 wrote: Thu Sep 09, 2021 2:43 pm
FactualFran wrote: Thu Sep 09, 2021 11:51 am
vested1 wrote: Thu Sep 09, 2021 7:09 am [ommited for brevity]
Answer to questions in the opening post:

1. If you start benefits with the one for 2022-07 (age 70), the initial benefit payment (paid 2022-08) should include 48 months of delayed retirement credits (DRC). According to the quote in the opening post from the Code of Federal Regulations that applies in this case: "Any increase in your benefit amount is effective beginning with the month you attained age 70."

2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."

3. If you start benefits with the one for 2022-01 (age 69 years 6 months), the initial benefit (paid 2022-02) should include 42 months of DRC (30 months as in the answer for the previous question plus 12 months of delay during 2021).
Your answer aligns with what I was expecting. Basically, any filing prior to age 70 will result in a delay of full credits until the following January (2023). The initial additional income, even if it's only 30 months for 2022 would be a substantial raise in fixed income. That being said, it is much less of an issue if I simply wait until May 2022 to file for maximum benefits to begin in August 2022.

I may be a victim of my own over-analyzation however. I look at a possible COLA of +5% in SS benefits next year and tend to rationalize an earlier filing. A 4% increase for waiting another 6 months for the maximum benefit on top of the projected COLA is compelling.

I am a stickler for words, and the wording of the linked SS reference seems to have been misinterpreted by others. Other threads have had comments which said that even if you waited to begin benefits until age 70, unless you were born in January you wouldn't have all of your credits applied until the following January. If Mike Piper chimes in the answer will be set in stone, and will hopefully help someone else with the same question. (Not that I don't trust your answer).
FractualFran's answer is excellent. If you file at 70, the DRCs are applicable immediately.
B. When benefits are increased because of increment months

DRC increases are effective:
•in January of the year following the year the increment months were earned;
•in the month of attainment of age 70; or
•in the month of death of the NH, for widow(er)s benefits with DRCs.
https://secure.ssa.gov/apps10/poms.nsf/lnx/0300615690
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Re: SS Delayed Credits Timing

Post by ObliviousInvestor »

Chip Munk wrote: Thu Sep 09, 2021 4:08 pm
FactualFran wrote: Thu Sep 09, 2021 11:51 am 2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."
So if the OP starts benefits in Dec 2021, that initial payment will not include the 11 months of DRCs earned through Nov 2021. Would the OP eventually receive a lump sum payment for the difference? The sentence you quoted implies they do not "make you whole". Am I understanding correctly?
That's correct. The payment for December would not include those 11 DRCs, and they would not be paid later as a lump sum. Then the monthly payment would be increased the following month (January) as those 11 DRCs would become effective.
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Re: SS Delayed Credits Timing

Post by Chip Munk »

ObliviousInvestor wrote: Thu Sep 09, 2021 7:00 pm
Chip Munk wrote: Thu Sep 09, 2021 4:08 pm
FactualFran wrote: Thu Sep 09, 2021 11:51 am 2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."
So if the OP starts benefits in Dec 2021, that initial payment will not include the 11 months of DRCs earned through Nov 2021. Would the OP eventually receive a lump sum payment for the difference? The sentence you quoted implies they do not "make you whole". Am I understanding correctly?
That's correct. The payment for December would not include those 11 DRCs, and they would not be paid later as a lump sum. Then the monthly payment would be increased the following month (January) as those 11 DRCs would become effective.
Thank you Mike for clarifying this.
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Re: SS Delayed Credits Timing

Post by vested1 »

ObliviousInvestor wrote: Thu Sep 09, 2021 7:00 pm
Chip Munk wrote: Thu Sep 09, 2021 4:08 pm
FactualFran wrote: Thu Sep 09, 2021 11:51 am 2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."
So if the OP starts benefits in Dec 2021, that initial payment will not include the 11 months of DRCs earned through Nov 2021. Would the OP eventually receive a lump sum payment for the difference? The sentence you quoted implies they do not "make you whole". Am I understanding correctly?
That's correct. The payment for December would not include those 11 DRCs, and they would not be paid later as a lump sum. Then the monthly payment would be increased the following month (January) as those 11 DRCs would become effective.
Thanks Mike and FactualFran, and others who responded as well. The bolded section was something I was unaware of, and could make a difference to someone contemplating exactly when to file. 11 months of DRC's lost (as far as a lump sum payment) for filing 1 month too early is self-defeating. Sure, the DRC's are still credited, but not the additional amount for simply waiting another month.

In my case I would have been expecting a lump sum check for 7.66% of my PIA from DRC's in 2020 which would never have come had I filed to begin payments in January 2022. Not a big deal, about $200 in my case, but nonetheless good to know. Thanks again for the clarification. More than ever I am committed to waiting the full time for maximum benefits.
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Re: SS Delayed Credits Timing

Post by crefwatch »

Additional information that may be helpful:

viewtopic.php?p=6000101#p6000101
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Re: SS Delayed Credits Timing

Post by Alan S. »

Also, take note of the fact that when DRCs are delayed until the following January payment, and you are whole going forward, the lost DRCs from the one pre age 70 filing year are not recovered, they are forfeited.

The forfeited amount is a function of the number of months in the filing year benefits are collected and the DRC amount. So if benefits began in Feb of the filing year you forfeit 1 month of DRCs for 11 months, and if they begin in December you forfeit 11 months of DRCs for one month. If the DRC is $20, each of the above results in $220 forfeited. Starting benefits very early or very late in the year results in the least amount forfeited, although for the lifetime bottom line you are still better off delaying as long as possible if you actually live beyond the break even year.

Conversely, if benefits start mid year, you forfeit 6 months of DRCs for 6 months, so the max dollars forfeited goes from 220 to 720. Therefore, starting benefits before year 70 in mid year will cause a much higher one time forfeited amount than starting very early or very late in the year.

Again, the forfeited amounts are only for the year benefits begin, not for any subsequent years.

Am sure Fran or another SS expert can fine tune the above math, but the general point remains. If you reach age 69 and are tempted to file just before 70, you might want to delay to 70 to avoid any forfeiture.
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Re: SS Delayed Credits Timing

Post by Chip Munk »

Alan S. wrote: Fri Sep 10, 2021 10:33 am Am sure Fran or another SS expert can fine tune the above math, but the general point remains. If you reach age 69 and are tempted to file just before 70, you might want to delay to 70 to avoid any forfeiture.
You piqued my interest. I believe the formula works out to be:

(0.08/12) * PIA * (14M - M^2 -13) where M is the month benefits begin, and (0.08/12) * PIA is the value of one DRC.

So in your example where one DRC is worth $20, and claiming in July: 20 * (98 - 49 - 13) = 20 * 36 = 720
If claiming in December: 20 * (168 - 144 - 13) = 20 * 11 = 220

As you pointed out, starting one's benefit in July results in the largest forfeited amount -- 3.27 times as much as what you forfeit if you begin benefits in the lowest months of February or December.
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Re: SS Delayed Credits Timing

Post by Mitchell777 »

I've always had a blind spot on this issue. So, if the OP applies in May to begin SS payments in July (the month turning 70) for first payment in Aug, does he lose any money? ty
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Re: SS Delayed Credits Timing

Post by Chip Munk »

Mitchell777 wrote: Fri Sep 10, 2021 5:08 pm I've always had a blind spot on this issue. So, if the OP applies in May to begin SS payments in July (the month turning 70) for first payment in Aug, does he lose any money? ty
Nothing is forfeited if you are starting your benefit at age 70. In that case they will apply any DRCs earned in the current year when calculating your benefit.

It makes no sense to me that they won't do the same for someone claiming some time between one month past their FRA through one month before age 70 who starts their benefit in any month other than January, but instead makes them wait until January of the following year to be credited with the final DRCs they've earned.
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Re: SS Delayed Credits Timing

Post by crefwatch »

Alan S. wrote: Fri Sep 10, 2021 10:33 am Also, take note of the fact that when DRCs are delayed until the following January payment, and you are whole going forward, the lost DRCs from the one pre age 70 filing year are not recovered, they are forfeited.
Alan, I am no expert on this, but this SSA page says more or less the opposite of what you wrote (quote of your post edited for size). What is the authority for your statement, please?

https://www.ssa.gov/benefits/retirement ... ayret.html
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Re: SS Delayed Credits Timing

Post by Eagle33 »

crefwatch wrote: Thu Sep 16, 2021 7:36 pm
Alan S. wrote: Fri Sep 10, 2021 10:33 am Also, take note of the fact that when DRCs are delayed until the following January payment, and you are whole going forward, the lost DRCs from the one pre age 70 filing year are not recovered, they are forfeited.
Alan, I am no expert on this, but this SSA page says more or less the opposite of what you wrote (quote of your post edited for size). What is the authority for your statement, please?

https://www.ssa.gov/benefits/retirement ... ayret.html
Based on the example on the SS site you reference, it sounds like Alan S is correct. In the 69th birthday year one receives benefits that factor in delayed credits of 68th birthday year. Then starting the year after, the benefits increase to full amount of delay credits. Nothing said about paying the missing delayed credit dollars not paid the year when starting SS.
If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start receiving benefits.

For example, if you reach your full retirement age (67) in June, you may plan to wait until your 69th birthday to start your retirement benefits. Your initial benefit amount will reflect delayed retirement credits earned from your full retirement age through the year before your 69th birthday. In January of the following calendar year, your benefit will increase for the credits earned in the year of your 69th birthday.
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Re: SS Delayed Credits Timing

Post by DonFifer »

I applied for SS at age 70 in March 2019, with my birthday being in April and my first check coming in May.
Any COLAs from previous years are included in your PIA at the time you file for benefits.
When I applied they took the additional step of redoing my wife's benefit to include the higher spousal benefit.

Cannot say how it would have worked if I had claimed at less the 70 yo.
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Re: SS Delayed Credits Timing

Post by Nestegg_User »

Alan S. wrote: Fri Sep 10, 2021 10:33 am Also, take note of the fact that when DRCs are delayed until the following January payment, and you are whole going forward, the lost DRCs from the one pre age 70 filing year are not recovered, they are forfeited.

The forfeited amount is a function of the number of months in the filing year benefits are collected and the DRC amount. So if benefits began in Feb of the filing year you forfeit 1 month of DRCs for 11 months, and if they begin in December you forfeit 11 months of DRCs for one month. If the DRC is $20, each of the above results in $220 forfeited. Starting benefits very early or very late in the year results in the least amount forfeited, although for the lifetime bottom line you are still better off delaying as long as possible if you actually live beyond the break even year.

Conversely, if benefits start mid year, you forfeit 6 months of DRCs for 6 months, so the max dollars forfeited goes from 220 to 720. Therefore, starting benefits before year 70 in mid year will cause a much higher one time forfeited amount than starting very early or very late in the year.

Again, the forfeited amounts are only for the year benefits begin, not for any subsequent years.

Am sure Fran or another SS expert can fine tune the above math, but the general point remains. If you reach age 69 and are tempted to file just before 70, you might want to delay to 70 to avoid any forfeiture.

I think that's what SScritic had in his old thread: hence why I plan to apply in Nov for Dec payment and have the DRC's apply in the Jan period, for payment in Feb.
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Re: SS Delayed Credits Timing

Post by Nestegg_User »

crefwatch wrote: Thu Sep 16, 2021 7:36 pm
Alan S. wrote: Fri Sep 10, 2021 10:33 am Also, take note of the fact that when DRCs are delayed until the following January payment, and you are whole going forward, the lost DRCs from the one pre age 70 filing year are not recovered, they are forfeited.
Alan, I am no expert on this, but this SSA page says more or less the opposite of what you wrote (quote of your post edited for size). What is the authority for your statement, please?

https://www.ssa.gov/benefits/retirement ... ayret.html
He gave you the POMS... that's pretty much the authority
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Re: SS Delayed Credits Timing

Post by crefwatch »

I apologize for my misunderstanding of Alan's post. He is correct.

My misunderstanding, however, was mainly about the tautological aspect of the result he reports. Once one understands that the DRC's are not "applied" to the payout stream until the following year, it is axiomatic that they are forfeited. That word is factually correct, but I had not viewed it in that way.

It's a poor comparison, but if your insurance company manages to delay medical reimbursement for a year, then your potential interest on that money is forfeited; But we don't usually chose the word forfeited - because so many people suffer from the hit to their cash flow when they have to pay for the care-which dwarfs the potential interest earnings. That's just as the amount of the forfeited DRC's are dwarfed by the monthly payment from SS.

I suspect that the SS system has developed the delay of applying the last year's DRC's, and the forfeit of DRC's from the year of initiating payments, to preserve the system's money. That's just the way it is.
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Re: SS Delayed Credits Timing

Post by JohnFiscal »

I suspect that the SS system has developed the delay of applying the last year's DRC's, and the forfeit of DRC's from the year of initiating payments, to preserve the system's money. That's just the way it is.
I agree that the "January rule" likely was used to save the system some money. But since so very few people delay their benefits it would seem there is not much money to save. (I have seen figures reported indicating how few do delay, it will be an interesting study project to see how many do.) Rather, I think the savings come in by having to do these calculations only once per year in a large batch operation.

On the other hand, I'll bet the SSA is entirely happy to reduce benefits for early retirement based on a monthly analysis, seems like the same process would be used.
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Re: SS Delayed Credits Timing

Post by HueyLD »

crefwatch wrote: Sun Sep 19, 2021 8:06 am I suspect that the SS system has developed the delay of applying the last year's DRC's, and the forfeit of DRC's from the year of initiating payments, to preserve the system's money. That's just the way it is.
The SSA did not develop such a delay system because it wanted to. The delay is encoded in the law that goes back to year 1972. Keep in mind that the Congress passed the law with the President’s consent. The SSA cannot make up a scheme without following the law passed by democratically elected lawmakers we sent to DC.

42 U.S.C. 402 (w)(3) For purposes of applying the provisions of paragraph (1), a determination shall be made under paragraph (2) for each year, beginning with 1972, of the total number of an individual’s increment months through the year for which the determination is made and the total so determined shall be applicable to such individual’s old-age insurance benefits beginning with benefits for January of the year following the year for which such determination is made; except that the total number applicable in the case of an individual who attains age 70 after 1972 shall be determined through the month before the month in which he attains such age and shall be applicable to his old-age insurance benefit beginning with the month in which he attains such age.
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Re: SS Delayed Credits Timing

Post by 22twain »

HueyLD wrote: Sun Sep 19, 2021 11:48 am The delay is encoded in the law that goes back to year 1972.
Consider the state of information-processing technology in 1972. Punched cards, magnetic tape, dialup modems at 300bps, sneakernet... :twisted:
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Re: SS Delayed Credits Timing

Post by FactualFran »

HueyLD wrote: Sun Sep 19, 2021 11:48 am The SSA did not develop such a delay system because it wanted to. The delay is encoded in the law that goes back to year 1972. Keep in mind that the Congress passed the law with the President’s consent. The SSA cannot make up a scheme without following the law passed by democratically elected lawmakers we sent to DC.

42 U.S.C. 402 (w)(3) [rest omitted for brevity]
42 U.S.C. 402 (w)(3) is the law written by the Legislative Branch of the federal government. Details of how the Executive Branch enforces the law are in the Code of Federal Regultions (CFR). The relevant section in this case is 20CFR404.313, "What are delayed retirement credits and how do they increase my oldage benefit amount?", part of which is
(c) When is the increase because of delayed retirement credits effective? -

(1) Credits earned after entitlement and before the year of attainment of age 70. If you are entitled to benefits, we examine our records after the end of each calendar year to determine whether you have earned delayed retirement credits during the previous year for months when you were at or over full retirement age and you were fully insured and eligible for benefits but did not receive them. Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned.

(2) Credits earned after entitlement in the year of attainment of age 70. If you are entitled to benefits in the month you attain age 70, we examine our records to determine if you earned any additional delayed retirement credits during the calendar year in which you attained age 70. Any increase in your benefit amount is effective beginning with the month you attained age 70.
ryman554
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Re: SS Delayed Credits Timing

Post by ryman554 »

Can us mere novices understand in detail what this really means?

1. My birthday is in April. I want to claim SS at FRA of 67.
1a:. When do I have to tell SSA that. I want my money?
1b:. I get my PIA per month, starting when?

2. Oops,. I forgot to talk to the SSA and claim until September. That's 5 months of delayed credit (I think).
2a. My PIA gets increased by 8% x (5/12)?
2b. I get my regular PIA from September (?) to December(?), only getting the increased amount in January?

3. I wait until I'm 68 in April. Same as scenario #2, excepting my PIA is now a full 8% higher? And I have 8 more months of my normal PIA (April to December) before higher stiff kicks in?

3b. Now I wait until I'm 69. I still only get my age 67 pia until the following year?

4. I wait until 70. Now,. I get my 24% increased PIA right off the bat?
FactualFran
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Re: SS Delayed Credits Timing

Post by FactualFran »

ryman554 wrote: Mon Sep 20, 2021 11:01 am Can us mere novices understand in detail what this really means?
You do not get your PIA. You get a monthly benefit amount that is based on your PIA. Delayed retirement credits change the benefit amount not the PIA.

Answers to some of your questions:

"2b. I get my regular PIA from September (?) to December(?), only getting the increased amount in January?" The delayed retirement credits for the months of the year in which benefits are started will be in the benefit amount beginning with January of the following year.

"4. I wait until 70. Now,. I get my 24% increased PIA right off the bat?" You do if you start benefits with the one for the month you attain age 70 (and if you qualify for up to 48 months of delayed retirements credits). If you start benefits in the year you attain age 70 but before the month you attain age 70, then the initial benefit amount does not include the delayed retirement credits for months of the year in which benefits are started; the delayed retirement credits for those months will be in the benefit starting for the month you attain age 70.
ColoRetiredGirl
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Re: SS Delayed Credits Timing

Post by ColoRetiredGirl »

ObliviousInvestor wrote: Thu Sep 09, 2021 7:00 pm
Chip Munk wrote: Thu Sep 09, 2021 4:08 pm
FactualFran wrote: Thu Sep 09, 2021 11:51 am 2. If you start benefits with the one for 2021-12 (age 69 years 5 months), the initial benefit (paid 2022-01) should include 30 months of DRC (6 month of delay during 2018 after FRA, 12 months of delay during 2019, 12 months of delay during 2020). The DRC for the 11 months of delay during 2021 will be applied starting with a later benefit. It should be applied starting with the benefit for January 2022 (paid 2022-02). According to the section of the Code of Federal Regulation linked to in the opening post includes that applies in this case: "Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned."
So if the OP starts benefits in Dec 2021, that initial payment will not include the 11 months of DRCs earned through Nov 2021. Would the OP eventually receive a lump sum payment for the difference? The sentence you quoted implies they do not "make you whole". Am I understanding correctly?
That's correct. The payment for December would not include those 11 DRCs, and they would not be paid later as a lump sum. Then the monthly payment would be increased the following month (January) as those 11 DRCs would become effective.
I contacted the SSA office this morning and was told if I filed after my birthdate (in June) but before January 2023 (edit) I was NOT entitled to receive the 8% for June 2022 because I didn’t wait until January to file (68.7 yo). I mentioned filing in November or December. It can’t be this complicated. :(
Last edited by ColoRetiredGirl on Thu Jun 16, 2022 8:22 am, edited 1 time in total.
JohnFiscal
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Re: SS Delayed Credits Timing

Post by JohnFiscal »

ColoRetiredGirl wrote: Wed Jun 15, 2022 9:32 pm I contacted the SSA office this morning and was told if I filed after my birthdate (in June) but before January 2022 I was NOT entitled to receive the 8% for June 2022 because I didn’t wait until January to file (68.7 yo). I mentioned filing in November or December. It can’t be this complicated. :(
I am also in the process of applying (my application is being reviewed for my May birthday, with several years of Delayed Retirement Credits). I believe I have a good handle on how these and the COLA work. A few months back I saw a very convoluted discussion at Reddit in the "Social Security" subreddit about this issue. I believe that some of the replies by poster(s) who are known SSA employees (or retirees) are either incorrect or playing word games. In either case the result of their interpretation is incorrect, IMO.

The point made in the Reddit discussion is that because the applicant has not been getting benefits since January they are not eligible for this year's COLA. HOWEVER...the applicant's PIA will be re-calculated for the current year with this year's COLA included (!) and the DRCs (delayed retirement credits) are added to the "new" PIA. Numerically, the effect is the same... taking last year's calculated PIA plus the COLA or re-calculating the PIA for the current year.

(see that Reddit discussion here https://www.reddit.com/r/SocialSecurity ... urce=share)

I have been given such misinformation by the main phone line at the SSA during the past several months about my own application that I simply do not trust those who are on the phone.

My suggestion is that you download the SSA's benefit calculator "Anypia32.exe" to your computer, enter your wage history (available on the SSA's My Social Security site ...I'm sure you have that account set up), then you can calculate very accurately what your "old age" benefit should be, the PIA based on this current year (2022).

When I calculated my expected benefit with Anypia32 I matched precisely the "estimated" benefit on My Social Security, including the 2022 COLA. Now this is a unique situation, it matches for me because I am "retired"...not working but not yet collecting SS; normally these won't match for someone still earning wages. Also, note that when you submit your application the "projected benefit" gets yanked off from the My Social Security site, it's gone. I wish I had made a screen print of it, you may want to do so.

There are also several great Boglehead SS calculators, really good ones, but you'll have to hunt in the Wiki for them, too late in the PM for me.

Good luck!

Edit to add: note that there is a rule where the DRCs for the first year are not fully applied. The SSA applies these only in January of each year. So for your first year they will apply any DRCs due to you through December of the previous year. You will get "this year's" DRCs the following January. There are some threads here about that effect, maybe even in this thread. ...oops, yes, this is one of those threads and the discussion you quoted discusses this very issue!
ColoRetiredGirl
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Re: SS Delayed Credits Timing

Post by ColoRetiredGirl »

JohnFiscal wrote: Thu Jun 16, 2022 12:21 am
ColoRetiredGirl wrote: Wed Jun 15, 2022 9:32 pm I contacted the SSA office this morning and was told if I filed after my birthdate (in June) but before January 2022 I was NOT entitled to receive the 8% for June 2022 because I didn’t wait until January to file (68.7 yo). I mentioned filing in November or December. It can’t be this complicated. :(
I am also in the process of applying (my application is being reviewed for my May birthday, with several years of Delayed Retirement Credits). I believe I have a good handle on how these and the COLA work. A few months back I saw a very convoluted discussion at Reddit in the "Social Security" subreddit about this issue. I believe that some of the replies by poster(s) who are known SSA employees (or retirees) are either incorrect or playing word games. In either case the result of their interpretation is incorrect, IMO.

The point made in the Reddit discussion is that because the applicant has not been getting benefits since January they are not eligible for this year's COLA. HOWEVER...the applicant's PIA will be re-calculated for the current year with this year's COLA included (!) and the DRCs (delayed retirement credits) are added to the "new" PIA. Numerically, the effect is the same... taking last year's calculated PIA plus the COLA or re-calculating the PIA for the current year.

(see that Reddit discussion here https://www.reddit.com/r/SocialSecurity ... urce=share)

I have been given such misinformation by the main phone line at the SSA during the past several months about my own application that I simply do not trust those who are on the phone.

My suggestion is that you download the SSA's benefit calculator "Anypia32.exe" to your computer, enter your wage history (available on the SSA's My Social Security site ...I'm sure you have that account set up), then you can calculate very accurately what your "old age" benefit should be, the PIA based on this current year (2022).

When I calculated my expected benefit with Anypia32 I matched precisely the "estimated" benefit on My Social Security, including the 2022 COLA. Now this is a unique situation, it matches for me because I am "retired"...not working but not yet collecting SS; normally these won't match for someone still earning wages. Also, note that when you submit your application the "projected benefit" gets yanked off from the My Social Security site, it's gone. I wish I had made a screen print of it, you may want to do so.

There are also several great Boglehead SS calculators, really good ones, but you'll have to hunt in the Wiki for them, too late in the PM for me.

Good luck!

Edit to add: note that there is a rule where the DRCs for the first year are not fully applied. The SSA applies these only in January of each year. So for your first year they will apply any DRCs due to you through December of the previous year. You will get "this year's" DRCs the following January. There are some threads here about that effect, maybe even in this thread. ...oops, yes, this is one of those threads and the discussion you quoted discusses this very issue!
Thank you. I am also retired and now working so my calculation should be straightforward. . It is sad that SSA employees do not know the regulation. The lady I spoke to was snarky. So to dumb it down if I file for December 2022 (payable in December) the February 2023 will include the DRCs through November, correct? I will run my numbers in Anypia32 but at this point I will file for January 2023 to make sure SSA personnel calculate it correctly.
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Chip Munk
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Re: SS Delayed Credits Timing

Post by Chip Munk »

ColoRetiredGirl wrote: Wed Jun 15, 2022 9:32 pm I contacted the SSA office this morning and was told if I filed after my birthdate (in June) but before January 2023 (edit) I was NOT entitled to receive the 8% for June 2022 because I didn’t wait until January to file (68.7 yo). I mentioned filing in November or December. It can’t be this complicated. :(
If I'm understanding correctly, you turned/will turn 68 this month so your FRA is 66 and you reached that age in June 2020. For those who file after FRA but before age 70, the DRCs earned each year are not credited until January of the following year. You earned 7 DRCs in 2020 so your Social Security statement for 2021 should reflect that you got credit for them in Jan 2021. You earned 12 more in 2021 which should have been credited to you as of Jan 2022, bringing your total DRC credits to 19. Your Social Security statement for 2022 should reflect those 19 credits.

You have earned 5 more so far this year (for Jan-May) and if you start your benefit in Nov you will earn a total of 10 this year (for Jan-Oct). If you start in Dec 2022 instead of Nov, you will have earned 11 DRCs, but in either case, they will not be credited to you until Jan 2023.

Let's assume you start your benefit in Nov 2022. Your benefit for Nov (payable in Dec) will be your PIA (which has already been adjusted for 2022's COLA as of Jan 2022) increased by your 19 DRCs, so PIA * (1 + (19 * 0.08/12)).

The COLA for 2023 will be applied starting with your Dec 2022 benefit, so it will be the amount above multiplied by (1 + COLA percentage). You will receive this amount in Jan 2023.

For Jan 2023, you will finally be credited with those last 10 DRCs (for delaying for Jan - Oct 2022) so you will now have a total of 29 DRCs. Your benefit for Jan 2023 (payable in Feb 2023) will be your 2023-COLA adjusted PIA * (1 + (29 * 0.08/12)).


To add to the confusion, once you are approved for benefits, the Social Security rep you speak with will provide you with the benefit amount after your Medicare Part B (and any IRMAA you owe) has been deducted, and maybe also after your tax withholding. So it's a good idea to work out the final numbers in advance so you know whether things were calculated correctly or not.
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Chip Munk
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Re: SS Delayed Credits Timing

Post by Chip Munk »

JohnFiscal wrote: Thu Jun 16, 2022 12:21 am Also, note that when you submit your application the "projected benefit" gets yanked off from the My Social Security site, it's gone. I wish I had made a screen print of it, you may want to do so.
Excellent advice. I had read about this problem before I applied for my benefit, so I grabbed all the information I thought I might need from My Social Security prior to submitting my application.

I also think it's a good idea to track your PIA. Once you get past the end of the year in which you reach FRA, your PIA is no longer displayed in your My Social Security account. Instead, it shows your monthly benefit, which reflects the credit you've received for any DRCs you've earned as of the end of the previous year. If you are contemplating filing for benefits after FRA but before age 70, and will be owed some DRCs for the current year, you will need your PIA to do your benefit calculations at each stage -- 1) your starting month through Nov, 2) Dec and 3) Jan of the following year.

You can calculate your PIA by dividing the amount displayed as your maximum benefit at age 70 by the appropriate factor (1.32 for those of us eligible for a total of 48 DRCs), or scroll down your statement to the section where it shows the benefit your spouse would receive if filing for spousal benefits, double the amount shown to get your own PIA.

The above assumes you are no longer working. If that is not the case, your PIA will change due to your future earnings.
ColoRetiredGirl
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Re: SS Delayed Credits Timing

Post by ColoRetiredGirl »

Chip Munk wrote: Thu Jun 16, 2022 3:30 pm
ColoRetiredGirl wrote: Wed Jun 15, 2022 9:32 pm I contacted the SSA office this morning and was told if I filed after my birthdate (in June) but before January 2023 (edit) I was NOT entitled to receive the 8% for June 2022 because I didn’t wait until January to file (68.7 yo). I mentioned filing in November or December. It can’t be this complicated. :(
If I'm understanding correctly, you turned/will turn 68 this month so your FRA is 66 and you reached that age in June 2020. For those who file after FRA but before age 70, the DRCs earned each year are not credited until January of the following year. You earned 7 DRCs in 2020 so your Social Security statement for 2021 should reflect that you got credit for them in Jan 2021. You earned 12 more in 2021 which should have been credited to you as of Jan 2022, bringing your total DRC credits to 19. Your Social Security statement for 2022 should reflect those 19 credits.

You have earned 5 more so far this year (for Jan-May) and if you start your benefit in Nov you will earn a total of 10 this year (for Jan-Oct). If you start in Dec 2022 instead of Nov, you will have earned 11 DRCs, but in either case, they will not be credited to you until Jan 2023.

Let's assume you start your benefit in Nov 2022. Your benefit for Nov (payable in Dec) will be your PIA (which has already been adjusted for 2022's COLA as of Jan 2022) increased by your 19 DRCs, so PIA * (1 + (19 * 0.08/12)).

The COLA for 2023 will be applied starting with your Dec 2022 benefit, so it will be the amount above multiplied by (1 + COLA percentage). You will receive this amount in Jan 2023.

For Jan 2023, you will finally be credited with those last 10 DRCs (for delaying for Jan - Oct 2022) so you will now have a total of 29 DRCs. Your benefit for Jan 2023 (payable in Feb 2023) will be your 2023-COLA adjusted PIA * (1 + (29 * 0.08/12)).


To add to the confusion, once you are approved for benefits, the Social Security rep you speak with will provide you with the benefit amount after your Medicare Part B (and any IRMAA you owe) has been deducted, and maybe also after your tax withholding. So it's a good idea to work out the final numbers in advance so you know whether things were calculated correctly or not.
omg!!! a HUGE THANK YOU!!!!I should be able to calculate my benefits with your explanation.You made it very simple to understand the math. THANK YOU AGAIN!
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Chip Munk
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Re: SS Delayed Credits Timing

Post by Chip Munk »

ColoRetiredGirl wrote: Fri Jun 17, 2022 9:54 pm omg!!! a HUGE THANK YOU!!!!I should be able to calculate my benefits with your explanation.You made it very simple to understand the math. THANK YOU AGAIN!
You're welcome. I went through the learning curve on this myself last fall as you can see from the discussion further up in this very thread.
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