Concerned You May Have Claimed Social Security Too Soon?

Choosing when to begin Social Security can be one of the more important decisions in retirement planning. Benefits can generally begin as early as age 62, but claiming early results in a lower monthly benefit, while delaying can provide a larger benefit later.

But retirement doesn't always unfold exactly as planned. Perhaps your investments perform better than anticipated, you receive an unexpected inheritance or other windfall, you return to work, or you simply discover that your retirement expenses are lower than expected. This week our focus wrestles with a key question—what happens if you begin Social Security and later realize you don't need the income yet?

Fortunately, Social Security rules provide two potential opportunities to reconsider your decision—depending largely on how long ago you claimed and your age.

Option 1: Withdraw Your Claim Within 12 Months

If you recently started Social Security retirement benefits and change your mind, you may be able to withdraw your original application and reapply at a later date. Think of this as the closest thing Social Security offers to a "reset." If the withdrawal is approved, your original application is essentially treated as though it never took effect.

What You Should Know :

• There is a 12-month window. A withdrawal generally must be requested within 12 months of your first month of entitlement.
• You'll need to formally request the withdrawal. This is generally accomplished using Form SSA-521, Request for Withdrawal of Application.
• Benefits must be repaid. You generally must repay benefits received by you and family members based on your record, along with certain amounts withheld from your benefits, including applicable Medicare premiums and taxes.
• Other beneficiaries may need to consent. Individuals whose benefits would be affected by the withdrawal generally must provide written consent.
• You generally get one opportunity. A withdrawal of Social Security retirement benefits after entitlement is generally limited to once in a lifetime. Once the withdrawal is approved and the required amounts are repaid, you can wait and apply for Social Security again at a later age.

Option 2: Suspend Benefits After Full Retirement Age

What if your 12-month withdrawal window has already passed?

There may still be another option once you reach Full Retirement Age (FRA). If you have reached FRA but are not yet 70, you can generally request that Social Security voluntarily suspend your retirement benefits.

Unlike a withdrawal, you don't erase the original claiming decision or repay benefits you've already received. Instead, you temporarily stop receiving payments and begin earning delayed retirement credits for the months your benefits remain suspended.

For most current retirees, those credits can increase future retirement benefits by approximately 8% per year until age 70. Benefits can be restarted earlier upon request and otherwise generally resume automatically at age 70.

**Important: Suspending your benefit can also suspend benefits being paid to certain family members based on your earnings record. In addition, if Medicare Part B premiums were being deducted from your Social Security check, you'll need another method to pay those premiums while Social Security payments are suspended.

The Bigger Picture

Social Security isn't simply a question of "What age should I claim?" The decision should fit within your broader retirement income plan. Life expectancy, portfolio assets, other sources of income, taxes, employment, cash-flow needs, and the potential impact on a spouse can all influence the appropriate strategy.

Before making a decision, consider speaking with your financial advisor and the Social Security Administration to understand how the rules apply to your individual circumstances. As always, our team would be glad to help walk you through options and key parameters. Please do not hesitate to reach out.

Disclosure:

This material is provided for general informational and educational purposes only and should not be considered individualized financial, tax, or legal advice. Social Security rules, benefits, eligibility requirements, and claiming strategies are subject to change and may vary based on individual circumstances. Information regarding Social Security benefits should be verified with the Social Security Administration (SSA). Before making decisions regarding Social Security benefits, individuals should consider their personal financial circumstances and consult with their financial, tax, and/or legal professionals, as appropriate.