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…
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