Claiming Social Security as soon as you’re eligible might seem smart when you turn 62 and you’re facing a cash-strapped retirement. Why not start putting a monthly check from the government to use? After all, it’s your money that you’ve paid into the program all your working life.
The problem is, if you claim benefits before reaching your full retirement age (FRA), you’ll see a reduction in benefits that applies to the checks you’ll receive for the rest of your life. Depending on how early you claimed, your Social Security income could be up to 30% below what the amount could have been had you waited until your FRA. And the longer you’re able to wait even past your FRA, the more delayed retirement credits you’ll rack up, until the bonus maxes out at 70. All this waiting translates into bigger Social Security checks when you do start claiming them.
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So what happens if you discover you claimed Social Security too early and you’d rather wait to get more benefits later? The good news is, you have a few options.
1. You could withdraw your claim.
If it has been less than a year since you started claiming your Social Security benefits, it’s not too late to simply hit the reset button and undo your claim by filing a Form SSA-521. If you do, it’ll be as if you never claimed at all.
Unfortunately, there’s a catch. You do have to pay back the benefits you already received in order to withdraw your claim. Depending on how long you’ve been receiving benefits and how much you’ve already been paid, this could mean coming up with several thousand dollars to give back to the Social Security Administration (SSA).
Still, if you’re able to find the money and you’re within the year limit, withdrawing your claim is the simplest way to restore your ability to increase Social Security income by waiting to claim benefits.
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2. You could go back to work.
Another way to recoup some of the benefits you’ve lost by claiming early is to return to the workforce.
If you haven’t reached your FRA, going back to work results in a benefit reduction — provided you earn a certain amount of annual income. For 2019, your benefits are reduced by $1 for each $2 that you earn in excess of $17,640.
If you can earn enough money, you can have your benefits reduced substantially — or potentially reduced all the way down to $0. You’re credited for the reduction in benefits, so your Social Security checks will be bigger later.
Earning extra money now can also allow you to put more money into retirement savings, which will boost your retirement income from investments. Any turbocharge you can give your portfolio will help offset the benefit reduction from claiming Social Security prematurely.
3. You could suspend your benefits.
If you’ve already reached your FRA and realize you claimed benefits too soon, you have the option to suspend your benefits. If you do this, you can start earning delayed retirement credits — as you would have had you never claimed at all. Delayed retirement credits can be earned until age 70. Once you turn 70, waiting to claim Social Security won’t increase your benefits any more.
Unfortunately, many people who claim Social Security too early haven’t reached FRA yet, so this isn’t an option for everyone. But, if you’re between your FRA and 70, and you want to boost your benefits later, suspending your claim is a simple way to do it.
You can ask the SSA to suspend your benefits suspended either orally or in writing. You can also contact the Social Security Administration (SSA) by phone at 1-800-772-1213 or make the request in person at your local Social Security office, which you can find here.
Which redo is right for you?
If it’s been more than 12 months since you first claimed Social Security and you want to undo your claim, your only option may be to try to work and reduce your benefits — unless you’re over full retirement age but under age 70.
Unfortunately, if you can’t find work and can’t suspend your benefits or withdraw your claim, you don’t really have any other options but to live with your lowered Social Security benefit. You can find ways to make your retirement funds stretch further, though, such as by moving to a state that won’t tax your Social Security income.
Since it’s hard to undo an early benefits claim, make sure you understand exactly how Social Security works before you decide to claim. Then, you’ll be making the most-informed choice for your financial future.
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