Many older Americans are relieved to learn they can stop and restart Social Security benefits. Even if you did your homework to understand the basics of Social Security claims before filing, you may want a do-over. If you regret taking Social Security without realizing you were lowering your monthly Social Security check, take a deep breath and follow these steps.
When to stop and restart Social Security
There are no universal rules regarding who should stop or restart their benefits. And some of the options are nuanced. For example, if you started your Social Security benefits less than a year ago, you have more options. Or maybe you decided to return to work, or your family situation has changed. Take the time to understand the choices available to you and how they will affect your finances.
In general, you can boost your Social Security benefits by delaying the age at which you start taking them until you reach 70. To see how this rule plays out in the real world, consider the average Social Security check by age.
Why you might want to stop Social Security
Why anyone would consider stopping Social Security benefits?
Unfortunately, claiming Social Security before you reach full retirement age will reduce your monthly payments. So, most people stop benefits in order to increase the monthly payment by restarting at an older age. Fidelity estimates that 27% of Americans start claiming these benefits at age 62, the first year they are eligible, and 58% start claiming them before reaching full retirement age.
Of course, in some cases, those who lack the financial resources to support themselves later in life may have to start claiming benefits as soon as they become eligible. In other cases, it may have seemed like a good idea to begin claiming Social Security at age 62, but retirees regret the decision when they realize they can't support themselves on the lower payments.
However, older people who become more financially secure after age 62 don't have to stick with their decision to receive lower monthly payments. Additionally, those who realize they made a mistake by taking Social Security so early don't have to continue accepting those lower payments. This flexibility comes with some crucial rules and implications to consider.
Applying for withdrawal of Social Security benefits
If you filed to start receiving Social Security within the last 12 months and now want to return to work, you should file for a "withdrawal" of benefits using Form SSA-521. However, in this scenario, you must pay back everything you have already accepted from Social Security. The amount that must be repaid includes all the benefits paid to your spouse or other beneficiaries and everything the Social Security Administration (SSA) withheld for taxes, Medicare premiums, etc.
Filing for a withdrawal essentially resets your situation, making it as if you had never filed to begin benefits at all. However, if your withdrawal affects other beneficiaries like your spouse, they must also sign a consent form to stop the benefits.
After filing Form SSA-521, you will have 60 days to reconsider and withdraw that application before it will be processed, and you'll have to return everything that was paid out under your benefits.
Suspending Social Security benefits
On the other hand, if it's been more than 12 months since you started accepting Social Security benefits, you'll have to wait until you reach full retirement age (FRA) before you can suspend your benefits. FRA is the age at which you become eligible to receive full benefits from Social Security. It's age 66 and four months for those born in 1956 and gradually rises to age 67 for those born in 1960 or later.
Temporarily suspending your benefits after you reach FRA will earn you delayed retirement credits, boosting your monthly benefit payment. The SSA offers a chart listing the amounts of those benefit increases based on your date of birth and explaining how it calculates them. For people born after Jan. 1, 1943, the credit for each month you delay amounts to two-thirds of 1%.
You can ask the SSA to suspend your benefits via phone, in writing or by visiting your local SSA office. If you don't ask the SSA to resume your Social Security payments before you turn 70, it will automatically do so when you reach that age.
The bottom line
There is much to consider before you claim Social Security or before you withdraw or suspend your benefits. In addition to factors like your expected longevity and the size of your nest egg, it's also critical to account for your Medicare Part B premiums.
Normally, these premiums would be taken out of your Social Security benefits, but the Centers for Medicare and Medicaid Services will bill you directly for those premiums if you suspend your benefits.
Of course, deciding when to accept Social Security benefits is a personal decision only you can make. However, you may wish to speak to a tax expert or other adviser for help.
