When You Delay Your Social Security Benefits, Here’s How the Math Works

via Wall Street Journal

The frequent misstatement of the 8% annual increase in Social Security benefits for those who delay collecting is a pet peeve of mine. The increase in benefits each year from full retirement age to age 70 is 8% of the benefit at full retirement age. That means that each year you delay, your benefit goes up by the same dollar amount—which means that each year, it goes up by a slightly smaller percentage of the benefit you already are entitled to.

 

Consider a worker who was born between 1943 and 1954 and is entitled to a benefit of $1,000 a month at the full retirement age of 66. If he or she delays the start of Social Security to age 67, the benefit would be 108% of the full-retirement-age benefit, or $1,080.

If this person starts Social Security at age 68, the benefit would be 116% of the base, or $1,160. That’s 7.4% higher than for starting at age 67. Delaying from 68 to 69 (when the benefit is 124% of the base, or $1,240) is a 6.9% bump. At age 70, our worker would get $1,320, up 6.5% from the benefit starting at 69…

To read the full WSJ article CLICK HERE

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About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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