If you've already turned 66 or will hit that milestone before January 1, 2021, you're in luck.
You have (or had) an opportunity to earn a 32% increase in your Social Security benefits simply by waiting to claim them. Sadly, for future retirees turning 66 next year or later, that chance has gone away. While it's still possible to boost benefits, the maximum increase future retirees will see isn't going to be quite so high.
Here's why -- along with some tips on what you can still do to maximize your benefits, even if you've missed out on a chance for a 32% raise.
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There's a big change coming to Social Security for future retirees
Retirees have the opportunity to raise their standard Social Security benefit by earning delayed retirement credits. These can be earned for every month you wait to claim benefits after reaching the age the Social Security Administration has designated as your full retirement age, or FRA.
Delayed retirement credits are worth 2/3 of 1% for each month you wait to start your checks. That adds up to an 8% annual increase if you wait a year. If your full retirement age is 66 years old and you delay starting benefits until 70 (which is the maximum age at which you can earn delayed retirement credits), you'll earn four years of credits and can raise your standard benefit by a full 32%.
There's just one problem. Full retirement age was 66 only for those born between 1943 and 1954. That means everyone who has an FRA of 66 will have hit that age by the end of 2020. No future retirees who turn 66 after next year will have the opportunity to earn a full 32% boost to their Social Security benefits.
How much can future retirees increase their Social Security?
While the opportunity to earn four full years of delayed retirement credits will no longer be available to those turning 66 after 2020, it's still possible to boost your benefits by waiting until 70. Sadly, the amount of extra money future retirees can earn is going to gradually decline as the full retirement age moves later and later.
The table below shows what FRA will be for subsequent retirees, based on birth year -- along with the maximum number of months of delayed retirement credits you can earn.
| Birth Year | Full Retirement Age | Maximum Number of Months of Delayed Retirement Credits |
|---|---|---|
| 1955 | 66 and 2 months | 46 |
| 1956 | 66 and 4 months | 44 |
| 1957 | 66 and 6 months | 42 |
| 1958 | 66 and 8 months | 40 |
| 1959 | 66 and 10 months | 38 |
| 1960 or later | 67 | 36 |
While those who are turning 66 next year will still have the chance to earn 46 months of delayed retirement credits and boost their benefits by around 30.7%, those who aren't turning 67 until 2027 or later will be able to earn a maximum 24% boost.
That's still not nothing. If your standard benefit at full retirement age would've been $1,500 and you get a 24% benefit increase, you'll get $360 per month more. But it's a lot less than $480, which is the extra you'd have received if you scored a 32% raise.
Sadly, there's nothing that future retirees can do about the fact that FRA is changing next year -- it's a fact of life. And claiming later will still be the financially optimal choice for the majority of future retirees. But those who won't reach 66 by the end of 2020 need to be aware they won't have quite the same opportunities to boost their Social Security checks and may wish to plan accordingly by saving a little extra money in their retirement nest egg.
