For many seniors, the flexibility offered by Social Security benefits may be a relief. The ability to start, stop, and even restart benefits provides a way to adapt to changing financial circumstances. Even those who thought they fully understood the implications of their initial Social Security claims may find themselves wanting a do-over for various reasons.
Disclaimer: Social Security and the benefits it provides can eb complicated and often rules regarding access and use of benefits can change. The information provided here is deemed to be accurate, but it is only intended as basic information. For any situation regarding your Social Security planning, please contact a licensed and authorized professional before making any final decisions.
When to Consider Adjusting Your Social Security Benefits
There are no one-size-fits-all rules for deciding when to start, stop, or restart Social Security benefits. The options available may be quite nuanced. For instance, if you began receiving benefits less than a year ago, you have a broader range of choices. Changes in employment status or family circumstances may also prompt a reevaluation of your Social Security strategy. It’s essential to thoroughly understand how these decisions will impact your financial situation.
One common strategy to enhance Social Security benefits is delaying the age at which you start taking them until you reach 70. This delay may significantly increase your monthly benefit amount.
Reasons to Consider Stopping Social Security Benefits
Why would anyone consider stopping their Social Security benefits? The primary reason is to increase the monthly payment amount by restarting benefits at a later age. Claiming Social Security before reaching full retirement age results in permanently reduced payments. According to Fidelity, 27% of Americans start claiming benefits at age 62, the earliest eligibility age, while 58% begin before reaching full retirement age.
For some, starting benefits early may be necessary due to a lack of financial resources. However, others might regret the decision, finding it challenging to support themselves on reduced payments. If financial circumstances improve after starting benefits, there is an option to reset the situation.
How to Withdraw Social Security Benefits
If you’ve been receiving Social Security for less than 12 months and decide to return to work or change your plans, you may file for a “withdrawal” of benefits using Form SSA-521. However, this process requires repaying all the benefits received, including those paid to your spouse or other beneficiaries and amounts withheld for taxes, Medicare premiums, etc.
Withdrawing benefits essentially resets your Social Security record as if you never applied for them. If other beneficiaries are affected by this withdrawal, they must also consent to it. You have 60 days after filing Form SSA-521 to change your mind before the withdrawal becomes final.
Suspending Social Security Benefits
If more than 12 months have passed since you started receiving benefits, you’ll need to wait until you reach full retirement age (FRA) to suspend them. FRA is currently 66 and four months for those born in 1956, gradually increasing to 67 for those born in 1960 or later.
Suspending benefits after reaching FRA may earn you delayed retirement credits, which increase your monthly payments. The Social Security Administration (SSA) provides a chart detailing these increases based on your date of birth. For those born after January 1, 1943, the credit amounts to two-thirds of 1% for each month benefits are delayed.
You may request to suspend benefits by phone, in writing, or visiting your local SSA office. If you don’t ask to resume benefits by age 70, the SSA will automatically start them at that age.
Final Considerations
Deciding when to start, stop, or restart Social Security benefits is a personal decision with significant financial implications. Factors such as expected longevity, the size of your retirement savings, and your Medicare Part B premiums must be considered. If you suspend benefits, Medicare premiums must be paid directly, as they won’t be deducted from your Social Security payments.
Ultimately, this decision should be made with careful consideration and, if necessary, the guidance of a financial advisor or tax expert.
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