Started Social Security

[SteveH287900]

Turned 66 in April. Filed for SS in August. The letter I recieved said it will arrive in September . The amount is what they showed me in April. Shouldn't this be a few dollars more since it is starting 4 months later? 

Someone told me I wouldn't see that till next year. True?

[fffred]

This post from "Ask Larry" addresses your question nicely.

"Larry" is Professor Laurence Kotlikoff of Boston University. He's a well-known expert on Social Security who has had his "Ask Larry" columns regularly presented on television news shows as well as print journalism (including the AARP magazine). He has collected the various "Ask Larry" questions/replies into this site https://maximizemysocialsecurity.com/how-will-my-delayed-retirement-credits-be-calculated

That link is to a particular question recently posted and answered in June this year. The situation is very much like your own with the timing of your birth month and the delayed retirement credits. Kotlikoff points out in reply to the question that with 18 months worth of DRCs the benefit "will ultimately be 12% higher than your FRA rate" but that "if you start drawing effective with September 2019 you will initially only receive credit for the delayed retirement credits (DRC) you earned through December 2018. Your DRCs for the months January through August of 2019 wouldn't be creditable until effective with the payment you're due for January 2020". Thus he is describing the "January" rule I mentioned in my first post.

The rule is further described in the SSA's Operations Manual https://secure.ssa.gov/apps10/poms.nsf/lnx/0300615690 scroll to "B" at the bottom of the page.


"Ask Larry" is an awesome resource for SS.

.

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@SteveH287900 wrote:

Turned 66 in April. Filed for SS in August. The letter I recieved said it will arrive in September . The amount is what they showed me in April. Shouldn't this be a few dollars more since it is starting 4 months later? 

Someone told me I wouldn't see that till next year. True?

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[GailL1]

@fffred 

SSA certainly doesn't say anything about not getting the DRC amount down the road on their related page:

https://www.ssa.gov/planners/retire/1943-delay.html

Pretty clear actually - pretty straight forward too -

Why should a person have to wait for something that they have already earned by waiting?

[fffred]

Gail,

You're right!  That page doesn't say anything about any "January" rule.

So last year when I ran the Social Security Admininstration's own, most accurate, software/calculator, the Anypia32 software, and got unexpected results because of this rule (unknown to me at the time) I thought "surely there must be an error". Some other forums provided some direction to this, the hint of the January rule.

Eventually I found:

1 - the actual SS law on the issue, the CFR - Code of Federal Regulations, linked to above

2 - the SSA's own Operating Manual instructions on this (the POM above)

3 - the cryptic instruction on the public page https://www.ssa.gov/OACT/quickcalc/early_late.html  with bold instruction "If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits. The calculator below gives you the amount with all credits applied for comparison purposes." So even they have taken a shortcut with that on-line calculator

4 - the actual reporting from the Anypia32.exe software from SSA. As far as I know, this is what they use themselves (the batch version) (https://www.ssa.gov/oact/anypia/download.html)

5 - support from Prof. Kotlikoff's opinion.

Sure, I can be wrong. And I don't really care other than I want to know how this works...for my own situation, I don't like surprises.

But I guess I won't know unless/until someone who has delayed SS and then collected can weigh in on this. With certifiable numbers, not just "aw, shucks".

In answer to your comment/question, I think that Rosanne Roseannadanna said it best "It's always something". Isn't it?

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@GailL1 wrote:

@fffred 

SSA certainly doesn't say anything about not getting the DRC amount down the road on their related page:

https://www.ssa.gov/planners/retire/1943-delay.html

Pretty clear actually - pretty straight forward too -

Why should a person have to wait for something that they have already earned by waiting?

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[PaulH22939]

Thanks @fffred! I was having the same problem with Anypia32. I did some digging after reading your post. It turns out that in the "Supplemental Worker Information" screen if you select "Calculate benefit after initial enrollment" and enter a date a year after retirement it will show you the higher payout. Very helpful in planning the long-term benefit once it settles down.

[GailL1]

@fffred 

Yes, Larry says the same thing here too  in this Forbes article from a question.

https://www.forbes.com/sites/kotlikoff/2017/09/08/ask-larry-%E2%80%8B%E2%80%8Bhow-are-delayed-retire...

per Larry at the link -

For example, if you turn 66 1/2 in December 2017 and start benefits with that month, you won't be credited with any DRCs initially. The 6 DRCs you would have earned for the months June through November 2017, would be added later, and would increase your benefit rate by 4% effective with your payment for January 2018. Post-entitlement DRCs are added through an automated process. Due to budget limits, the Social Security Administration (SSA) has given this process a relatively low priority, and only runs the updates every other year. The increases due are fully retroactive, but this results in a substantial delay in receiving the proper amount of DRCs. As a result, it may be until sometime in 2019 before you'd actually receive your DRC increase. You would receive the appropriate back pay to January 2018, however. If you haven't already done so, you can run expert software, such as my company's Maximize My Social Security or another top rated program that accounts for DRCs to help determine the best time to start taking your benefits. Best, Larry

The AARP also talks about it here:  https://www.aarp.org/retirement/social-security/questions-answers/delayed-retirement-credits/

If you file for Social Security after FRA but before age 70, your delayed retirement credits are added to your benefit payment starting in January of the year after you earned them. If you wait until you turn 70, you get all your credits right from the first payment.

I waited until 70 so I cannot verify that there is a delay before reaching 70- 1st time I have heard of it - like I said the SSA is not forcoming about it on their Benefits Planning website - Have you tried their calculator?

Evidently you are correct - I guess

but doesn't that mean that if the Delayed Retirement Credit amount is delayed - SSA owes and additional credit on the Delayed, Delayed Retirement Credit. 

Do you like my new avatar?

[fffred]

Let me add that this quirky "January" rule applies only for DRCs of 47 months and less.

Once you hit age 70, with 48 months of DRCs, you're good. The SS rules indicate that the full credit (1.32 factor for "most" cases) is to be applied immediately.

And anyone who claims in January will get their full DRCs immediately as well.

[GailL1]

@SteveH287900 

IF everything you said in your post is accurate then it does seem you are owed a bit more.

Your benefit AFTER FRA grows at a monthly rate of 2/3rds of 1% or .0067 per month X (4) months = 2.68 %

This agrees with this SS Benefits Planner Page on Delayed Retirement Credits.

https://www.ssa.gov/planners/retire/1943-delay.html

How Delayed Retirement Affects Your Social Security Benefits

If you start getting benefits at age* Multiply your Full Retirement Benefit by
66 100%
66 + 1 month 100.7%
66 + 2 months 101.3%
66 + 3 months 102.0%
66 + 4 months 102.7%

This was as good as I could get the table to print here - but it is shown on the link.

You should get the correct amount from the get go -

Contact them and find out what's up with that -

[fffred]

A rule applies to the delayed retirement credits (DRC), mentioned in bold on this page (https://www.ssa.gov/OACT/quickcalc/early_late.html). I have researched the origins of the rule in the CFR (Code of Federal Regulations) but don't have it handy. [see below, I found it]

The bold instruction says "If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits."

What it means for you is that you filed for benefits in August, thus for the duration of 2019 your DRC (if any) are not applied until the following January (January, 2020). At which point you will get the "bump" for 4 months worth of DRC, plus you may get a COLA (cost of living). The 4 months worth is around a factor of 1.02667  (2.667% bump)

I just verified/confirmed this with Social Security's program ANYPIA32.exe (version 2019.2).

I've been studying how the DRCs work and the "gotcha" is that bold statement above. They bold that now but back up through January this year they didn't and it was easy to gloss over that rule and misunderstand it. Sometime I'll post about this, my understanding of it that is.

It's not clear to me if the "missing money" from those months up to the following January is ever made up.

good luck

Edit: the rules are in 20 CFR para 404.313 (c). See https://www.law.cornell.edu/cfr/text/20/404.313

scroll down to subparagraph (c)(1). States:

"(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."  ... which is consistent with the ANYPIA32 software from Social Security.

ps: I am not an expert in Social Security. I'm just some grunt.

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@SteveH287900 wrote:

Turned 66 in April. Filed for SS in August. The letter I recieved said it will arrive in September . The amount is what they showed me in April. Shouldn't this be a few dollars more since it is starting 4 months later? 

Someone told me I wouldn't see that till next year. True?

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[SteveH287900]

Thank you. Exactly what I was looking for!