When you claim Social Security, you get to decide when to start benefits.
Most people begin receiving checks after they file their claim. However, there is actually a weird Social Security rule that may allow you to get retroactive benefits. These are benefits you could have collected in the past, but didn't.
Not everyone can take advantage of the rule, though. Here's what you need to know about how you could qualify.
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Retirees may be entitled to up to six months of retroactive benefits
Although many people aren't aware of it, it's actually possible to get Social Security checks for a period prior to the time you claim them. As the Social Security Administration explains, you can do this by choosing to start your benefits before the month you actually applied.
For example, if you apply for Social Security in August, you don't have to set a future date, like September or beyond, for your first check to come. Instead, you can opt for your Social Security payments to begin well before August. If you do, you'll get retroactive benefits.
There is a limit to this, though. The Social Security Administration explains that it will pay retroactive benefits only after you have reached your Full Retirement Age (which is 67 if you were born in 1960 or later). So if you were making that claim in August because you'd just reached your FRA, you wouldn't be able to get any retroactive benefits at all.
The Social Security Administration will also pay retroactive benefits only up to six months in the past. So, if you were making a claim in August, you could ask for retroactive benefits dating back to February, but not for January or for December of the prior year.
Why would you want retroactive benefits?
While you can claim Social Security retroactive benefits to get paid several months of retirement income, it doesn't make sense for everyone to do this.
When you wait to claim your benefits beyond your FRA, you earn delayed retirement credits. These increase your benefits by 2/3 of 1% per month. If you retroactively claim your benefits, some or all of the credits you earned by waiting until after FRA disappear.
If you retroactively claimed back to February after earning six months of delayed retirement credits by waiting to start checks, your retroactive claim would mean you give up six months of credits, foregoing around a 4% increase in monthly payments. That 4% boost would have resulted in you getting higher checks for the rest of your life.
Still, there are times when a retroactive claim may make sense. If you face a big unexpected expense and you don't want to pull a lot of money out of your retirement plans, for example, you could decide that it makes sense to retroactively claim your Social Security benefits to get several thousand dollars to pay for the costs.
Just be sure you understand the full implications of your decision by calculating both how much your retroactive payments will be and what impact making this choice will have on future income. Taking the time to learn the details about Social Security, including its stranger rules, can help you to supplement your investments and have the secure retirement you deserve.
