Social Security Benefit Deferral: What to Know

By, Bobby Nevin, Elder & Disability Law Clinic Student, Fall 2022

Social Security is one of the main federal benefits programs available to retirement-age Americans. The Social Security Administration (“SSA”) administers three main benefits programs: Old Age and Survivors Insurance (“OASI”), Disability Insurance (“DI”), and Supplemental Security Income (“SSI”).[1] OASI provides retirement and survivors benefits to qualified workers and their families.[2] DI provides benefits for workers who become disabled and their families.[3] Finally, SSI provides financial support to “aged, blind, and disabled adults” and their children who have limited income and resources.[4] The first of these—OASI, and more specifically, the retirement benefits provided via this program—will be the focus of this blog post, as it is the largest SSA program by a rather wide margin.[5]

            The retirement benefits provided through OASI are meant to replace a certain portion of your pre-retirement income.[6] Thus, in order to receive such benefits, a worker must typically have worked in for forty quarters (i.e., ten years of work), and reached full retirement age.[7] There are exceptions to these general rule, particularly in certain job sectors such as federal government employment, state and local government employment, and self-employment (among others).[8] Earnings made while working in these types of positions carry with them special rules for calculating the amount of OASI benefits ultimately available.[9] However, for the large majority of employees, the standard qualification rules apply.[10]

            One notable feature unique to OASI benefits is the ability to defer the benefits.[11] If you have reached full retirement age (for instance, 67 years old for folks born after 1960, or 65 if born before 1943), you may ask the SSA to suspend your retirement benefit payments.[12] Delaying your benefits in this manner will increase your yearly Social Security retirement benefits by 8% for each year you delay them, until you reach age 70. That is, if one delays their benefits from age 67 to age 70, they will receive 24% greater yearly retirement benefits through Social Security. Therefore, delaying your benefits is a potentially great option for various groups of people, and should absolutely be considered while planning out your retirement. For instance, if you are still working and making more than your retirement benefits would pay out anyway, or if you are already receiving retirement benefits from a private organization/pension fund, delaying these benefits is a great way to receive additional, higher-paying retirement benefits through Social Security when you eventually opt-in.

            A quick example can more clearly elucidate the benefits of deferral a bit more clearly. Take, for instance, a qualifying individual born in 1960, who is slated to receive $1,000 per month upon full retirement age, which comes out to $12,000 per year. If such an individual delays their benefits for three years (until they turn 70), they will receive 124% of their expected yearly benefits. This number comes out to $14,880 per year (as opposed to $12,000), and roughly $1,240 per month (as opposed to $1,000). This additional retirement income can make a huge impact, particularly at a time when the cost of living is increasingly dramatically. Therefore, individuals who are in a financial position to defer their Social Security retirement benefits should certainly consider doing so.

[1] Soc. Sec. Admin., Overview of the Social Security Administration (2021).

[2] Id.

[3] Id.

[4] Id.

[5] Id. (noting that OASI provides benefits to roughly 55 million beneficiaries each month, while DI and SSI benefits are provided to roughly 10 million recipients and 8 million recipients, respectively).

[6] Learn about Retirement Benefits, Soc. Sec. Admin. (last visited October 1, 2022)

[7] Id. (noting that full retirement age is 67 for those born in 1960 or later, varies if born between 1955-1960, 66 if born between 1943-1954, and 65 if born before 1943).

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Suspending Your Retirement Benefit Payments, Soc. Sec. Admin. (last visited October 1, 2022),higher%20benefit%20payment%20to%20you.