By James Royal, Ph.D., Bankrate.com.
When it comes to Social Security, the standard advice you might hear suggests that you won’t get a second chance to decide when to start taking your benefits. But in at least two circumstances you can get a chance at a “do-over.” If you do decide to change your benefits, you could end up with substantially more money each month.
Here’s how you can refile for Social Security to get a higher monthly benefit check.
Get higher Social Security after you’ve filed for benefits
Workers have a variety of ways to maximize their Social Security benefits, but one of the easiest is simply waiting to file for them. The longer you wait to file for benefits, the higher your monthly payment will be, up to age 70 when your benefit tops out. But in some cases, you can still enjoy the substantial annual increase – up to 8% – even if you’ve already filed for benefits.
Yes, even after you’ve opted to take Social Security benefits, you can decide that you’d rather earn a higher monthly check. You have two key strategies – detailed below – that can help you do that, but you can only use them in certain situations.
Why would you want to get a “do-over” on Social Security? A variety of reasons:
—If you filed for benefits before full retirement age and then earned more than a certain level, Social Security will charge you a penalty for this earned income.
—If you receive a new source of income such as from a job or inheritance, you may decide that you don’t need your Social Security check right now and can delay it.
—You may decide that you’d rather make do with your income now in exchange for a better-than-average payout later, a valuable strategy if you expect to live a long time.
Regardless of the reason for the decision, you have two circumstances for a “do-over.”
1. Suspend your Social Security benefit
You can suspend your Social Security benefit if you meet both of the following two conditions:
—You took benefits before full retirement age.
—You have reached full retirement age but not yet 70 years old.
If those conditions apply, you can suspend your benefits and earn delayed retirement credits for each month that they’re suspended. For each month between full retirement age and age 70, your benefit increases by 0.666%, or an 8% annual rate. That’s on top of any cost-of-living adjustment (COLA) increase, too. So you may be able to drastically improve your payout even when it’s late in the game.
If you suspend your benefits, they’ll stop the month after you make the request, and you’ll be able to restart your benefits at any time at whatever the new payout would be. When you reach age 70, however, your benefits will automatically restart at the then-current payout amount.
Importantly, to suspend your benefit, you do not need to repay any payout you’ve already taken. While suspending your benefit affects those claiming benefits on your record such as a spouse or minor child, it won’t affect an ex-spouse claiming benefits on your record.
2. Withdraw your Social Security benefit
You can withdraw your Social Security benefit if you meet the following conditions:
—You started receiving benefits less than 12 months ago.
—You have not filed for a withdrawal of benefits before.
If those conditions apply, you may withdraw your benefit and it will be as if you had never filed for Social Security. You may then refile for benefits at a later date. Your potential benefit will increase as prescribed by the program, up to 8% annually once you hit full retirement age.
Unlike the first option, you can withdraw your benefits at any age so long as you meet the conditions above. If you withdraw your benefits, you’ll have to repay any money you’ve already received, including any Social Security payouts as well as payments the program made for you such as for Medicare, taxes and payments made to a spouse or children on your account.
To withdraw your benefits, you must make the request in writing. After Social Security has approved the application, you have up to 60 days to reverse the decision to file.
Key facts about stopping your Social Security benefits
These two ways to stop your benefits are different in at least two major respects:
When you can file: A suspension of benefits is available only if you’ve filed for early benefits and now are above full retirement age but not yet 70 years old. In contrast, the withdrawal of benefits is available only if you’ve received benefits for less than 12 months and have not filed for a withdrawal before.
Repayment of benefits: With a suspension of benefits, you’re not required to repay any money you’ve already received from Social Security. In contrast, with a withdrawal of benefits, you’ll need to repay any benefits you’ve received.
It’s also vital to note that if you decide to turn off your Social Security payments and you have Medicare premiums deducted from your monthly check, you’ll need to pay Medicare yourself.
In some circumstances, it can make a lot of sense for individuals to take a “do-over” on their Social Security, enabling them to secure a higher monthly benefit and maybe a higher lifetime benefit, too. Given the program’s complexities, it makes a lot of sense to work with an advisor who specializes in retirement guidance.
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