Social Security Do-Overs: There Are 2 Ways To Reset Your Benefits
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Deciding when to claim Social Security benefits is one of the most significant retirement planning decisions most people make. You want to get it right.
But what if you file and then decide you should have waited a few years? Maybe a change in your financial situation means you can now afford to delay those monthly checks you’re collecting. In such a situation, you might be eligible for a Social Security do-over that can reset your benefits.
Also here’s the average Social Security check for men versus women.
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Do-Over Options for Resetting Social Security Benefits
The Social Security Administration provides two options for resetting your Social Security benefits: suspend and withdraw.
A suspension is for those who have reached full retirement age. You can put your benefits on hold to earn delayed retirement credits for a higher monthly benefit. If you haven’t yet reached full retirement age, you may be eligible to withdraw your benefits claim, essentially canceling it so you can reapply when you’re older and your monthly benefit is higher.
Both options have eligibility requirements and pros and cons to carefully consider before changing your Social Security status. Read on to find out more about how each option works.
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Suspending Your Social Security Benefits
Suspending your benefits is more like a pause than a do-over. Once you request a suspension, you stop receiving benefits until you request to resume them or you turn 70. During this time, you earn delayed retirement credits, which is why this option is available only to those who’ve reached full retirement age. Every delayed credit you earn will increase your monthly benefit payment when you begin collecting again.
Who Can Suspend Their Social Security Benefits?
You must meet two conditions to suspend your benefits:
- You started receiving benefits before reaching full retirement age.
- You’ve reached full retirement age but have not yet turned 70.
Full retirement age is 66 to 67 years old, depending on your birth year:
How To Suspend Your Social Security Benefits
If you qualify for a suspension, you can contact the SSA to request one. However, consider the following pros and cons before deciding whether a suspension is in your best financial interest.
Pros and Cons of Suspending Your Benefits
The primary advantage of suspending your benefits is accumulating delayed retirement credits. You earn one credit for every month in which you suspend your benefits, up to age 70. A year delayed earns you 12 credits and an increase of about 8% on your monthly Social Security benefit.
A suspension also has some downsides to consider:
- All benefits received based on your record, including your dependents, are also paused. This does not include benefits received by an ex-spouse based on your record.
- You can’t receive benefits based on someone else’s record, such as a spouse, while your benefits are suspended.
- Medicare Part B premiums are no longer automatically deducted from your monthly Social Security check during a suspension, so you must make other payment arrangements. Late payments could result in the loss of your coverage.
- You’ll also suspend any Supplemental Security Income benefits you may receive.
How To Restart Suspended Social Security Benefits
If you choose to resume suspended benefits before age 70, simply contact the SSA with your request. Otherwise, your suspended benefits will automatically resume the month you turn 70.
Withdrawing Your Social Security Benefits Claim
While suspending your Social Security benefits is more like a pause, withdrawing your benefits claim is an actual do-over. With a withdrawal, your benefits will cease and you must pay back any benefits you’ve received. It would be as though you never filed a benefits claim in the first place. You can then reapply at any time.
Who Is Eligible To Withdraw a Social Security Benefits Claim?
You must meet two conditions to qualify for a withdrawal:
- It’s been less than 12 months since you received your first Social Security check.
- You’ve never requested a withdrawal.
How To Withdraw Your Social Security Benefits Claim
To withdraw your benefits claim, complete “Form 521: Request for Withdrawal of Application,” which you can download from the SSA website and mail a copy to the closest SSA office. According to page one of Form 521, anyone who receives benefits based on your initial claim must also approve your withdrawal request.
After the SSA receives your cancellation form, you have 60 days to reverse your request if you decide it’s not the best move for your finances.
If your withdrawal request is approved, the SSA will notify you of how much you must repay in received benefits, including:
- Monthly Social Security check payments received by you or your dependents
- Any withholdings from those benefits for Medicare premiums, taxes or garnishments
Pros and Cons To Consider
Like with a suspension, a withdrawal’s primary pro is a higher future Social Security benefit since it allows you to reapply at a later time, when your benefit amount has increased.
Unlike a suspension, this option requires you to repay all of the benefits you’ve received, which can be substantial if you’ve been collecting for close to a year or you aren’t the only person drawing benefits under your record. You’ll not only stop receiving a monthly check, but you’ll also need to have enough money to repay all of the benefits you’ve received — so it’s crucial to determine whether the higher future benefits will justify the immediate financial impact of a withdrawal.
When Might a Social Security Do-Over Make Sense?
Suppose you’re receiving reduced Social Security benefits because you filed before reaching your full retirement age, but you can meet your monthly expenses without relying on your Social Security check. In that case, it’s probably worth looking into a do-over — and a higher monthly Social Security check in the future. Perhaps returning to full-time employment, if you’re able to, would allow you to withdraw or suspend your benefits claim.
You shouldn’t take the decision to withdraw or suspend your Social Security benefits claim lightly, but you can always reapply or resume your benefits if you find that you actually do need them to make ends meet.
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