Claiming Social Security benefits early can significantly reduce the monthly amount you receive. While starting your benefits at age 62 might seem appealing, it can cut your monthly check by up to 30% compared to waiting until full retirement age (FRA). If you’ve already claimed early and are experiencing regret, there are still ways to increase your benefits.
Reversing Your Decision Within the First Year
If you decide within the first 12 months of claiming that you want to reverse your decision, the Social Security Administration allows a one-time do-over. You must withdraw your application and repay all the benefits you’ve received, including those paid to family members. Once this is done, it’s as if you never claimed benefits, allowing you to apply later for a higher amount. This option can be financially challenging since it requires repaying the received benefits, which may not be feasible for everyone.
Suspending Benefits After Full Retirement Age
Even if more than a year has passed since you started receiving benefits, you can still boost your monthly amount. Upon reaching your FRA, you can choose to suspend your benefits. During the suspension period, your benefits will increase by two-thirds of 1% each month, equating to an 8% annual increase. By waiting until age 70 to resume your benefits, you could see an increase of up to 28%.
For instance, if you claimed benefits at age 62 and receive $1,400 per month instead of $2,000 (which would be your benefit at FRA of 67), suspending benefits at 67 and waiting until 70 could increase your monthly check to $1,736. While this increase doesn’t entirely offset the reduction from claiming early, it does provide a significant boost.
Important Considerations
Both of these strategies involve periods during which you won’t receive Social Security payments, necessitating alternative income sources or substantial savings to cover your expenses. If repaying the benefits or suspending them isn’t an option, even delaying your claim by a few months can lead to higher benefits. Additionally, Social Security benefits are adjusted annually for inflation through cost-of-living adjustments (COLAs), helping your payments keep pace with rising costs over time.
Deciding when to claim Social Security benefits is a crucial decision that impacts your financial stability in retirement. Understanding your options and how to enhance your benefits can help you make more informed and beneficial choices.
For more information visit:
Hagen, Kailey. “Regret claiming Social Security early? This little-known move could boost checks up to 28%.” The Motley Fool, reviewed on July 18, 2022. For more detailed information, visit USA Today
To learn about Medicare:
https://westcompassinsurance.com/medicare-basics/