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Wife Wonders Whether to Collect Social Security at 66 or 70 years of age.

Ask Rusty - DRCs vs. Collecting and continuing to earn Social Security

Dear Rusty: My wife is now 66 and not collecting Social Security. She wants to wait until age 70 to collect the larger benefit. However, I know that she could collect now and her payments will grow if she continues to work until age 70 because she had some years in her lifetime with zero earnings.

My question is what will be the difference in benefits at age 70 if she waits to collect, or she collects now at age 66 and continues to contribute to S.S.? Signed: Working Wife's Husband

Dear Working: This is an Interesting question - Let's examine the parts. When a person reaches their full retirement age (FRA) but does not apply for Social Security benefits, they earn Delayed Retirement Credits (DRCs) at a rate of 2/3rds of 1% for each month they delay. So for each full year beyond their FRA, up to age 70, they earn 8% more than they would receive at their full retirement age, to a maximum of 132% of their FRA benefit.

When you apply for benefits, Social Security examines your lifetime earnings record, adjusts (indexes) your earnings in each of those years for inflation, and finds the 35 years with the highest earnings (only earnings up to the annual payroll withholding tax limit are counted). If you don't have a full 35 years of earnings, they put zeros in some years to reach a total of 35, the number of years used to calculate your benefit amount.

They then add up the earnings for those 35 years, divide the total by 420 (the number of months in 35 years) to arrive at your Average Indexed Monthly Earnings (AIME). Your AIME is then subjected to a formula using "bend points", where different percentages are applied to 3 different portions of your average monthly earnings to arrive at your Primary Insurance Amount, or PIA, the amount of benefit you are entitled to at your full retirement age.

Social Security reviews each beneficiary's earnings record annually and, if their current earnings are more than the indexed earnings in any of the 35 years used to calculate your benefit they will replace that year with the higher earnings amount and re-compute your benefit accordingly. In this way the monthly benefit amount can increase if current earnings exceed the indexed earnings in any of the years used to compute your PIA. But, how would this potential increase compare against the annual 8% delayed retirement credit your wife would receive if she does not apply at her full retirement age?

Assuming 4 years of zero earnings, an AIME of $3000 and a PIA of $ 1473, I calculate that replacing those 4 zero years with $25,000 per year in earnings would boost your wife's benefit to $1549 per month at age 70. However when the 8% DRC's are applied to the $1473 PIA her benefit amount at age 70 would be $1944 per month, $395 more.

So, if your goal is to maximize her monthly benefit, there is a clear financial advantage to delaying. But, when to start benefits is never as simple as looking only at the financial numbers; health and lifestyle factors must always be taken into account. And you should also consider that if your wife applies now, by the time she reaches 70 years of age she will have collected 4 years' worth of benefits. If your wife is healthy and as a couple you are financially comfortable with her earnings from work, waiting to collect is certainly viable option. If, instead, she becomes unable to work, needs the extra money, or simply decides she wants to begin Social Security, she can apply at any time to start collecting her benefits.

Also note that if she continues to work, her current earnings may, if they are large enough, improve her benefit amount regardless of whether or not she is already collecting Social Security benefits.

The information presented in this article is intended for general information purposes only. The opinions and interpretations expressed in this article are the viewpoints of the AMAC Foundation's Social Security Advisory staff, trained and accredited under the National Social Security Advisors program of the National Social Security Association, LLC (NSSA). NSSA, the AMAC Foundation, and the Foundation's Social Security Advisors are not affiliated with or endorsed by the United States Government, the Social Security Administration, or any other state government.

Furthermore, the AMAC Foundation and its staff do not provide legal or accounting services. The Foundation welcomes questions from readers regarding Social Security issues. To submit a request, contact the Foundation at

Social Security Matters by AMAC Certified Social Security Advisor Russell Gloor, Association of Mature American Citizens


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