Dear Dr. Don,
I am 66 this month and will begin receiving Social Security retirement benefits now. I also am contributing $6,000 to a traditional individual retirement account, or IRA. My Social Security benefits will be taxable, and I do not need to use them. Is there a tax-sheltered place where I can invest the benefits?
— Rick Retirement

Dear Rick,
It sure sounds like you are a candidate for waiting to collect your Social Security retirement benefits. By delaying collecting benefits past your full retirement age, you’ll see your monthly benefit increase substantially when you finally do start collecting benefits. If you wait until age 70, your monthly benefit will be approximately 32 percent more than it is at age 66.

Called delayed retirement credits, a person your age can see the monthly benefit increase by 8 percent annually until age 70. At age 70, you stop earning delayed retirement credits, so there’s no reason to wait past age 70 to start collecting benefits.

If you decide to delay receiving benefits, you’ll want to work with your Social Security office on the best approach to stop receiving benefits. You can repay the benefits you’ve received if you’re within 12 months of starting to receive benefits, or do a “file and suspend” in which you’ve filed for benefits but want to suspend receiving benefits until a later date. File and suspend works best for workers who have reached full retirement age and want a spouse to be able to collect a spousal benefit, but also want to earn delayed retirement credits on the worker’s record.

There are new limits on how long you can receive benefits and then decide to pay them back. That limit is now 12 months. Within that time period, if you are receiving Social Security retirement benefits and change your mind about when they should start, you may be able to withdraw your Social Security claim and reapply at a future date.

Retirees often feel that delayed retirement credits, despite the increase in future monthly benefits, somehow shortchange them because they’ve given up current benefits. Studies show that, on average, retirees who opt for delayed benefits receive as much money as retirees who start receiving benefits at their full retirement age.

There’s a lot of value in having a higher monthly payment that’s indexed to a cost-of-living adjustment. You’d pay a fortune to have an inflation rider on a fixed annuity policy. The government is giving you one for free. Delayed retirement credits amplify this benefit after age 70. Waiting isn’t right for everyone, but it sure sounds like it’s right for you.

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