Why do Social Security Benefits start lower than I expected and then change?

If a Social Security Benefit begins after 'Full Retirement Age' (FRA), or what the Social Security Administration calls 'Normal Retirement Age', it usually benefits from deferral credits, meaning the benefit will be higher than it would have been if the person had begun Social Security at or before FRA. If the benefit begins mid-year, however, you may see that the benefit during the first calendar year is slightly lower than you expected, with a change in the first January after the benefit begins up to the expected amount.

In the example below, John's FRA is age 66 and 10 months (Jan 2026), but her chooses to take benefits when he is 68 years 3 months old (in Jun 2027). His full monthly benefit will be $3117, but in Jun 2027, it is only $3005. (All amounts referenced are in real dollars and so exclude future inflation adjustments.)

Reduced Benefit in the first Calendar Year

Full Benefit on the first of January

Why does this happen? During the first calendar year of benefits in this situation, John's monthly benefit amount only gets full deferral credits for completed years of deferral up to that point (so, deferral from Jan 2026 to Dec 2027). But once January 2028 hits, his benefit amount reflects the full benefit of all deferral months, including those from the year when benefits began (Jan 2027 to Jun 2027).

To summarize, as the Social Security Administration puts it, "If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits."

Note that this effect only applies to delayed benefits after FRA that benefit from the delay. It does not apply to reductions in benefits taken before FRA.