SOCIAL SECURITY
Fact Sheet
Delayed
Retirement Credits
The Social Security Amendments of 1983 (H.R.
1900, Public Law 98-21) contained two provisions which may have
an impact on when an individual decides to retire. The two provisions
are an increase in the retirement age that can first affect individuals
retiring in 2000 and an increase in the delayed retirement credit
for those who work beyond full retirement age.
Delayed Retirement Credits
- Social Security benefits are increased
(by a certain percentage depending on a person’s date of birth)
if retirement is delayed beyond full retirement age.
- The benefit increase stops when a person
reaches age 70, even if they continue to delay taking benefits.
Increase for Delayed Retirement
Year
of Birth |
Yearly
Rate of Increase |
Monthly Rate
of Increase |
1930 |
4.5% |
3/8 of 1% |
1931-1932 |
5.0% |
5/12 of 1% |
1933-1934 |
5.5% |
11/24 of 1% |
1935-1936 |
6.0% |
1/2 of 1% |
1937-1938 |
6.5% |
13/24 of 1% |
1939-1940 |
7.0% |
7/12 of 1% |
1941-1942 |
7.5% |
5/8 of 1% |
1943
or later |
8.0% |
2/3 of 1% |
- Background
- A provision allowing for a 1% credit
a year for delaying retirement past age 65, up to age 72,
was first enacted as part of the 1972 Amendments. It was increased
to 3% a year in the 1977 Amendments.
- The 1983 Amendments phased in an increase
in the percentage, based on a person’s date of birth, and
lowered the age at which the increase no longer applied to
70 (to correspond to the age of 70 at which the earnings test
no longer applies).
The earliest a person can start
receiving Social Security retirement benefits will remain age 62.
- Social Security benefits are reduced
for each month a person receives benefits before full retirement
age.
- For persons whose full retirement age
is 65, a retirement benefit is reduced by 5/9
of 1% for each month of benefits prior to full retirement
age.
- As the age for collecting full Social
Security benefits increases, persons who retire at age 62 will
see a greater reduction in their Social Security benefits.
- For persons whose full retirement age
is age 65 and 2 months or later, a retirement benefit will
be reduced by 5/9 of 1% for each month
up to the first 36 months of benefits before full retirement
age, plus 5/12 of 1% for each month
of benefits in excess of 36 prior to full retirement age.
- Examples:
- Social Security benefits are reduced
by 20% for a person who retires at 62 whose full retirement
age is 65 (born 1937 or earlier).
- Social Security benefits will be
reduced by 205/6% for a person whose
full retirement age is 65 and 2 months (retires at 62
in 2000).
- Social Security benefits will be
reduced by 25% for a person who retires at 62 whose full
retirement age is 66 (born 1943-1954).
- Social Security benefits will be
reduced by 30% for a person who retires at 62 whose full
retirement age is 67 (born in 1960 or later).
- Background
- The Social Security Amendments of 1956
lowered the minimum age for retirement benefits to 62 for
women.
- The Social Security Amendments of 1961
extended the early retirement provision to men.
The new Social Security
Statement:
- Tells a person their full retirement age
and
- Provides a retirement benefit estimate for
age 62, full retirement age, and age 70.
- The age 62 benefit estimate incorporates
the reduction for early retirement.
- The age 70 benefit estimate incorporates
delayed retirement credits.
SSA Press Office 449
Altmeyer Bldg. 6401 Security Blvd. Baltimore, MD 21235
410-965-8904 FAX 410-966-9973
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