Determining the age at which to begin taking Social Security is one of the most important retirement decisions you’ll face as it will have an enormous impact on the size of your monthly checks. You can file for benefits at any time starting at age 62, and once you start claiming, your benefit amount will be generally locked in for life. It’s critical, then, to take this decision seriously.
However, you do get one do-over if you change your mind after you file. This little-known trick could potentially boost your benefits by hundreds of dollars per month, but there are some strict requirements you’ll need to meet first.
How your age affects your benefit amount
The earlier you file for Social Security, the smaller your monthly payments will be. Waiting to claim until your full retirement age (FRA) is the only way to receive the full benefit amount you’re entitled to, based on your career earnings.
If you file before your FRA (as early as age 62), your benefit amount will be reduced by up to 30%. By waiting until after your FRA (up to age 70), you’ll receive your full benefit amount plus a bonus of at least 24% per month.
One common misconception is that if you file early, you’ll only receive reduced payments until you reach your FRA. In reality, claiming early will result in smaller checks every single month for the rest of your life.
Your one chance to change your mind
If you file for benefits early but then regret your decision, you have one opportunity for a do-over. You must withdraw your application within 12 months of filing and will also have to pay back all the benefits you’ve already received. After that, you can reapply at any time.
Only 29% of U.S. adults are aware that withdrawing an application is an option, according to a 2023 survey from the Nationwide Retirement Institute. But if you claim early and then change your mind, withdrawing your application and delaying benefits could dramatically increase your monthly payments.
For example, say you have an FRA of 67 years old and by filing at that age, you’d collect $1,800 per month. If you originally claimed at age 62, your benefit would be permanently reduced by 30%, leaving you with $1,260 per month.
However, if you were to withdraw your application and then wait until age 70 to file, you’d receive your full benefit amount plus an extra 24% — or $2,232 per month. That’s a whopping $972 more per month than you’d collect by filing at age 62.
Another way to boost your benefits
Withdrawing your application in order to delay benefits can be a smart way to increase your payments. But if you’re past the 12-month window or can’t afford to repay the money you’ve already received, there’s another option: suspend your benefits.
Once you’ve reached your FRA, you can press pause on collecting Social Security up to age 70. Then when you decide to resume payments, you’ll start receiving larger checks.
With this option, you won’t receive as much per month as if you’d delayed benefits from the start. However, if you’ve already filed for Social Security and can’t withdraw your application, suspending your benefits can be a good compromise.
Social Security can make or break retirement for many older adults, so it’s important to choose wisely when deciding at what age to claim. But if you file early and then change your mind, you still have options to help boost your benefits.
— Katie BrockmanWhere to Invest $99 [sponsor]
Motley Fool Stock Advisor's average stock pick is up over 350%*, beating the market by an incredible 4-1 margin. Here’s what you get if you join up with us today: Two new stock recommendations each month. A short list of Best Buys Now. Stocks we feel present the most timely buying opportunity, so you know what to focus on today. There's so much more, including a membership-fee-back guarantee. New members can join today for only $99/year.
Source: The Motley Fool