Filing for Social Security early can allow you to receive a larger check from the program, but it often results in a reduction in the total amount of benefits you’ll receive over your lifetime: Filing as early as possible at age 62 could reduce your monthly checks by up to 30% (compared to the amount you’d be eligible to receive at full retirement age).
Not everyone is aware of this before signing up, which can lead to major regret. There are ways to cancel early claims, but they also have drawbacks. Here’s what you need to know:
If you change your mind within one year of applying
The Social Security Administration allows a one-time retrial if you change your mind about wanting to stop applying. Social Security Benefits Within 12 months of enrolling, you must contact the Social Security Administration and ask them to withdraw your claim. You will then have to repay any benefits you or any other family members on your record have ever received from the program.
If you do this, the government will treat you as if you never applied for benefits, and if you apply later, you could get a larger check and potentially increased lifetime Social Security benefits.
But for most people, it’s impossible to pay back the full amount of benefits they’ve already received and likely used up. Even if it were possible, it’s not an option once you’ve been receiving Social Security for more than a year. That said, there is another way people who filed early and now regret it can boost their benefits.
What if I change my mind in a year?
Even if you have been receiving Social Security benefits for several years, Full Retirement Age (FRA)If you do, the government will stop sending you checks until you claim again or reach age 70 (the age at which you become eligible to receive the maximum Social Security benefit amount).
For each month you pause your pension, two-thirds of one percent will be added to your benefit, which works out to eight percent per year. People with an FRA of 67 can add up to 24 percent to their checks by postponing until age 70, while people who have just reached their FRA as of this writing can boost their benefits by 28 percent by postponing until age 70.
Let’s say you’re eligible for a $2,000 monthly benefit at your FRA of 67. But your check was reduced to $1,400 per month because you filed for Social Security at age 62. You’ll receive that amount for five years, but at age 67, your benefits will stop.
Assuming you’re patient over the next three years, your benefits will increase by 8% each year, meaning that when you resume receiving your benefits at age 70, you’ll receive $1,736 per month ($336 more per check).
While this isn’t as much as you would have received if you had never claimed Social Security in the first place, it’s an improvement that could increase your lifetime benefits by thousands of dollars.
trade off
The obvious drawback to these two strategies is that you’ll have to cover the costs yourself during the time you’re not claiming Social Security. If you have a lot of personal savings or continue to work in a job that pays steadily, this may be feasible, but it’s not feasible for everyone.
If you can’t afford to drop your claim or not receive benefits for years, consider delaying it for just a few months and getting the most benefit possible. Or, you can settle for your current benefit. Your benefit may not be as high as you hoped, but it will grow over time. Cost of Living Adjustment (COLA).
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