Unnoticed Social Security Regulation May Enhance Benefits Post-Claiming
In the realm of retirement planning, understanding Social Security is crucial for everyone. One lesser-known rule that could prove beneficial is the 'do-over' option, a chance for retirees to adjust their Social Security strategy if they filed too early but changed their mind shortly after.
This 'do-over' allows individuals who have been receiving benefits for less than 12 months to withdraw their application and essentially reset their benefit claim. To use this option, you must submit a written request (typically via Form SSA-521) within 12 months of first receiving benefits. It's important to note that you'll need to repay all Social Security benefits you and any family members received on your record during that time, including Medicare premiums and withheld taxes.
Once you've withdrawn, you can reapply for benefits later, potentially at a higher monthly amount due to delayed claiming credits. However, after 12 months, withdrawal is no longer possible; suspension of benefits becomes the alternative if you're at your full retirement age.
The full retirement age for Social Security benefits is 67 for those born in 1960 or later. If you're beyond 12 months but at full retirement age, you can suspend benefits (without repayment) to earn delayed retirement credits until age 70.
Claiming Social Security early and reducing the monthly benefit can lead to regret after retirement. If you retire at 62 and sign up for Social Security immediately, you may struggle with expenses due to smaller monthly benefits. It's worth noting that claiming Social Security ahead of full retirement age can result in a reduced monthly benefit.
Working while receiving Social Security benefits before reaching full retirement age can result in benefits being withheld if earnings exceed certain thresholds. This is another factor to consider when planning your retirement finances.
In summary, Social Security’s 'do-over' lets you withdraw your benefits application within 12 months of filing, repay what you received, and then reapply later to improve your benefit amount. After 12 months, withdrawing is no longer possible, but once you reach full retirement age, you can suspend benefits to increase future payments without repaying past benefits.
Educating oneself about Social Security is key to making informed decisions and improving retirement finances. This 'do-over' option, while lesser-known, offers a strategic opportunity for those who find themselves in a position to reconsider their initial Social Security filing. As always, careful financial planning is essential when making decisions about your Social Security benefits.
Personal finance during retirement involves careful consideration of Social Security benefits, and the 'do-over' option is a lesser-known tactic that can be beneficial. If you've filed for Social Security but decide to change your mind within 12 months, you can withdraw your application using Form SSA-521 and potentially claim a higher monthly benefit later, after repaying benefits received and Medicare premiums during that time.
