Ask any ten people what the best strategy is for claiming Social Security and you’ll likely get ten different answers. The decision on when to file is filled with what-if scenarios and “on-the-other-hand” arguments. Ultimately, it’s a highly individual decision. The best answer is the one that fully addresses your particular situation and, if you’re married, that of your spouse, since he or she will be affected by the choice you make.
Roughly 30 percent of beneficiaries start receiving Social Security payments at the earliest possible age, which (except for those on disability) is 62. But there are significant advantages to waiting until your full retirement age or, even better, until age 70 to claim Social Security. So, that raises the question: if you start payments early and then regret it, can you change your mind and have a Social Security do-over?
In this recent article from US News, contributing writer Brian O’Connell explains that the answer – with some restrictions and caveats – is yes. As the article puts it, “Changing course on claiming Social Security is doable, with more options than you might expect.” But you’ll have to act in the first 12 months after starting benefits, and – spoiler alert – early filers will need to repay in a lump sum all the money Uncle Sam has sent you. Let’s explore this idea further.
Most Social Security Beneficiaries Have 12 Months to Cancel
O’Connell starts by putting the vast scope and impact of Social Security on U.S. society into its proper context. “Approximately 67 million Americans pocketed a Social Security check in February 2024, according to the Center on Budget and Policy Priorities,” he writes. “That’s about 1 of every 5 U.S. citizens, the CBPP reports.”
In the early days of the program, according to this AARP article, all beneficiaries had to wait until age 65 to claim benefits. In 1956 the law was changed to allow women to receive reduced payment starting at age 62 – then in 1961, this privilege was extended to all workers regardless of gender. But as longevity has increased, the choice to start benefits at 62 and lock in a much lower payment has become a source of disagreement among planners and beneficiaries.
“Those who claim Social Security before their full retirement age often regret that decision and wish they had waited to qualify for larger payouts,” O’Connell claims. In fact, we couldn’t find any source for this assertion. While it’s certain that many early filers are glad that they did it, no doubt some, after more thoughtful reflection, do regret their haste. This is where the idea of a do-over enters the picture.
Any Eligible Beneficiary Can Halt Benefits Within 12 Months
“Many remorseful recipients don’t realize they can disconnect from Social Security and request a do-over,” O’Connell explains. “The fact is, any eligible Social Security recipient can cancel or withdraw a program application up to 12 months after benefit approval.”
This right is further outlined here on the Social Security website.
O’Connell spoke with registered Social Security Analyst Martha Shedden. “You’re allowed to pull your application once and reapply at a later date,” she told US News. “If Social Security payments are already hitting your bank account, that money must be repaid. That includes cash withheld by Social Security for Medicare premiums and some Medicare Part A medical expenses.”
Remorse Over Early Benefits Comes with a Cost
“If you feel remorse about claiming your benefits in the first year, you can halt payments,” Las Vegas Social Security advisor Sandy Kemp told O’Connell. “However, you’ll be required to pay back any benefits you received.”
Kemp advises contacting the SSA by telephone and claiming remorse as the reason for your request, according to US News. Rather than using the phone, we found a form called SSA-521 on the Social Security website along with the recommendation that the request for withdrawal be mailed to your local Social Security office.
In any case, Uncle Sam will tell you what to do next. “The SSA will send you a letter with the sum to pay back, along with payment methods,” Kemp told O’Connell.
Moreover, O’Connell quickly adds, “Although you received your benefits as monthly payments, the payback must be a lump sum. This can strain your finances, so make sure you have the liquidity to cover this expense before entering a remorse claim.”
Suspending Payments at Full Retirement Age
Once you reach full retirement age (FRA), which is between 66 and 67 for most beneficiaries, the rules shift considerably. If you begin benefits at your FRA and then decide you wish you had waited until age 70 when benefits reach their maximum, you can suspend Social Security payments and resume them later. “Doing so has its financial advantages,” says O’Connell.
“This is a great way to add delayed retirement credit up to age 70,” says Florida-based financial planner Chuck Czajka. “This means higher payments to you, but it also could mean higher survivor benefits to your spouse.”
Social Security refers to this practice as a suspension of retirement benefits. One huge difference: if you suspend payments at full retirement age, you do not have to pay back your previously paid benefits. You’re merely pausing your benefits so you’ll receive more when they eventually resume.
Social Security advisor Sandy Kemp puts the potential benefit into perspective. “[S]uspending your benefits means you can accrue the standard 8 percent annual increase, which compounds annually,” Kemp says. “If you suspend your benefits for three years, you gain 28 percent on top of your original Social Security benefit.”
Working During Retirement to Gain More Income
The US News article goes on to show how suspending your Social Security payments and continuing to work can be part of a winning retirement strategy.
“Working in retirement with suspended benefits is a great opportunity to increase your (Social Security) benefits for two reasons,” Kemp told O’Connell. First, Social Security will recalculate your benefits when you reach age 70, taking into account your last few years of work – which will likely replace earlier years in your career when you earned far less. This will increase your benefit level.
Second, as noted above, Social Security tacks on an 8 percent yearly increase if you delay or suspend benefits. “That’s on top of your increase from your higher wage,” Kemp adds.
Rajiv: Work With the Right Financial Professional
O’Connell ends his article with sound, if basic, advice. “If you’ve claimed Social Security early and are second-guessing that decision, consult a trusted financial advisor,” he writes. That’s because, as he puts it, “Deciding to delay, suspend or repay Social Security benefits should also align with a comprehensive retirement plan.”
We asked Rajiv Nagaich to comment on the question of how to make informed decisions about important financial matters like Social Security strategies. He agrees that good financial advice is a critical need. However, not all advisors are created equal.
“There are plenty of good, solid professionals in the financial industry,” he says. “But there are still some so-called planners out there who make their money by selling you their own brand of plans and policies. They’re lining their pockets by picking yours. Be careful!” he warns.
When it comes to making any significant financial decision, especially one as important as decisions involving Social Security, the most important item on Rajiv’s preparation list shouldn’t come as a surprise. “I tell everyone to sit down with a qualified, objective financial planner and prepare what we call a financial dashboard. It’s a planning tool that will give you unmatched peace of mind, no matter what happens. If you have to do a financial reset, your dashboard will guide you into making the right decisions.”
Don’t go it alone or wander in the financial wilderness. Contact us and we can recommend a qualified planner to help you.
Rajiv Nagaich – Your Retirement Planning Coach and Guide
The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public. Retirement: Dream or Disaster joins Rajiv’s ground-breaking DVD series and workbook, Master Your Future, as a powerful planning tool in your retirement toolbox. As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.
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Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.
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(originally reported at https://money.usnews.com)