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- Regret Claiming Social Security Early? These 3 Moves Could Help (financebuzz.com)
Filing for Social Security benefits at age 62 is the most common choice, and for many, it works out well. However, some retirees later wish they had waited, especially if they return to work or see how much larger their benefits could have been by delaying.
Fortunately, an early claim isn’t necessarily set in stone. If your retirement plans have shifted, there are ways to reverse or offset that initial decision and potentially increase your benefit.
Here are three key options to consider.
1. Withdraw Your Application Within 12 Months
If you filed for Social Security in the past year, you can request to withdraw your application by submitting Form SSA-521. Once approved, it’s as if you never filed, allowing you to reapply later for a higher monthly benefit.
There are some important conditions: you must repay every dollar you’ve received so far-including any benefits paid to family members on your record-and your spouse and dependents must give written consent. You only get one withdrawal in your lifetime, and you have to act within 12 months of your first payment.
Keep in mind, if you withdraw but want to keep Medicare coverage, you’ll need to pay premiums out of pocket since they won’t be deducted from your benefits anymore. Because you’re repaying benefits you’ve already paid taxes on, consulting a tax advisor is wise to understand the implications.
2. Suspend Benefits Once You Reach Full Retirement Age
If the 12-month withdrawal window has passed, suspending your benefit at full retirement age (between 66 and 67, depending on your birth year) is another strategy. You can pause your payments and earn delayed retirement credits of roughly 8% per year until age 70. Suspending benefits can boost your monthly payment by up to 32% without requiring repayment of any benefits received earlier.
For example, if you’re receiving $1,600 a month at full retirement age and suspend your benefit until 70, your monthly check could increase to about $2,112. The benefits missed during suspension can often be made up through the larger payments later on.
Keep in mind:
- Spousal and child benefits linked to your record will also pause.
- A divorced ex-spouse can typically continue to collect benefits during your suspension.
- You’ll continue paying Medicare premiums directly.
Suspending benefits works best if you can afford to go without that income for a few years.
3. Continue Working to Boost Your Benefit
Social Security calculates your benefits based on your 35 highest-earning years. If some of those years were low or had no earnings, continuing to work-especially at a higher salary-can replace those lower years and increase your benefit. Social Security automatically recalculates your benefit annually, so better earnings can permanently raise your monthly check.
For instance, someone who reached 62 with 30 years earning about $50,000 and five years with no earnings could increase their monthly benefit by roughly $300 (about 16%) by working five more years at $80,000 annually.
Also, if you claimed benefits early but kept working, some benefits may have been withheld due to the earnings limit. These withheld amounts aren’t lost; once you reach full retirement age, Social Security recalculates your benefit and credits you for those withheld months, increasing your future payments.
Choosing the Right Path
The best option largely depends on how recently you filed and your current circumstances. If it’s been less than a year and you can repay benefits received, withdrawing your application offers a fresh start and the chance to reapply later for more money.
Once that window closes, suspending benefits at full retirement age becomes the next best choice, letting you build up delayed credits without having to repay anything. Meanwhile, continuing to work is beneficial at any stage, as it can raise your benefit over time and complement the other strategies.
Final Thoughts
Unlike many financial decisions in retirement, an early Social Security claim leaves several opportunities to adjust course. If you’re reconsidering your initial claim, it’s wise to explore these options sooner rather than later.
Before making any moves, run your numbers using Social Security resources or consult a Social Security expert to determine the best fit for your situation. And if repayment is involved, a tax professional can help navigate the complexities.
The earlier you act, the more choices you’ll have-and the better your chances of turning that early claim into a larger monthly benefit for years to come.
Money Tips for Everyone
Regardless of your financial situation, there are always ways to improve your money management and build wealth:
- Increase your income: Consider side gigs or other opportunities to bring in extra cash without quitting your full-time job.
- Grow your savings: Time and compound interest are powerful tools.
Knowing your financial status and planning ahead-possibly with a professional-can help you retire comfortably.
- Take advantage of deals: Seniors can save by using discounts and finding the best prices, such as on car insurance, which can save hundreds annually.
At the same time, be mindful to avoid hidden expenses that drain your resources.
Small steps today can lead to greater financial security tomorrow.
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- Regret Claiming Social Security Early? These 3 Moves Could Help (financebuzz.com)