What to Do if You Filed for Social Security Too Early
MAYBE YOU WERE overconfident. Or perhaps you felt that you needed the money, but now have some form of buyer’s remorse. Either way, you may be concerned that you claimed Social Security too early.
“The vast majority of Americans take their Social Security benefit prior to full retirement age,” says Kate Stalter, co-owner and senior financial advisor at Better Money Decisions, a financial services company in Albuquerque, New Mexico. “It’s a problem because they lock in a lower benefit for the rest of their lives.”
If you feel you’ve taken your Social Security benefit too soon, here’s what you can do:
- Familiarize yourself with the enrollment rules.
- Withdraw the benefits claim if it’s been less than a year.
- Suspend your benefit payments.
- Start working again.
- Don’t beat yourself up.
- Seek financial planning advice.
As it turns out, you have some options to increase your payments going forward. There are several strategies you can employ if you want to reverse your decision to file for Social Security benefits.
Familiarize Yourself With the Enrollment Rules
The earliest you can apply for Social Security benefits is when you’re at least 61 and 9 months of age, and then you can start getting paid as soon as possible at age 62. It takes about three months for the checks to roll in, so you should apply for Social Security several months before you’re ready to get paid. Remember that you receive less money per month if you file for Social Security benefits before your full retirement age. Also, keep in mind that the Social Security Administration recommends signing up for Medicare three months before your 65th birthday, even if you aren’t retiring at that age.
The full retirement age is 67 if you were born in 1960 or later. If you were born before 1960, the retirement age is typically 65 or 66 and varies by birth year. Your Social Security benefits are based on Social Security work credits, which you get from your work history and what you pay in Social Security taxes.
Withdraw the Benefits Claim if it’s Been Less Than a Year
Here’s the good news: All you have to do is submit in writing that you’d like to withdraw your claim for benefits. Then, you can go back to not receiving Social Security benefits and wait until a later period when your payments will be higher. And now the bad news: You’ll have to pay back all of the money you received from Social Security, including any payments to a spouse or child. That may not be too hard if it’s just been a month or so, and you aren’t on a fixed income. If it’s been several months or more, and money is already tight, then it may be more difficult to return the money.
Suspend Your Benefit Payments
If you’ve reached your full retirement age, but aren’t yet 70 years old, you can contact the Social Security Administration and ask to suspend your benefits. At that point, you will begin to receive delayed retirement credits, which can be used to increase your future Social Security payments by 8 percent per year from your full retirement age up until age 70. “This is a great way to make up for filing at an earlier age and realizing a mistake was made,” says Brett Gottlieb, a financial advisor who owns Comprehensive Advisor, an insurance and financial services firm in Carlsbad, California. “In fact, for some people, given your financial situation, it might make sense to purposely create this strategy, which is known as start – stop – start.”
Start Working Again
Your Social Security payments are calculated based on your work record, and additional earnings could increase your future payments. If you aren’t yet at your full retirement age and continue to work after claiming benefits, part of your payments could be temporarily withheld, but you will receive higher Social Security checks later when your benefit is recalculated at full retirement age.
Don’t Beat Yourself Up
Filing for Social Security can be complicated for anyone. David Demko, a clinical gerontologist based in Jacksonville, Florida, says he filed for Social Security too early. Even experts on senior issues can make mistakes with filing for Social Security “that result in perplexing consequences,” he says.
Demko took his benefits at age 65. Then he paid back his benefits and hoped to postpone payments until age 70. But at age 68, he reversed his decision again, and the SSA paid him back what he had refunded. Demko isn’t wishy-washy. He just had a lot of life choices to make. For instance, he had some health issues, including mysteriously losing 55 pounds in six weeks, that made him think he wouldn’t live until age 70, which inspired him to start taking his Social Security benefits at age 65. He’s now in good health, he says.
Seek Financial Planning Advice
Demko says that returning a considerable amount of money to the Social Security Administration – $35,000 – created “an IRS tax-return nightmare.” That’s why Gottlieb’s advice would be smart to heed: “If you feel you have made a mistake or just aren’t sure and you want to make a change, find an expert in Social Security planning and work with them to review your personal situation and determine your overall goals and options before acting on any adjustments,” he says.
It may cost you upfront to consult with an expert, but if you make more changes with your Social Security account and don’t fully understand what you’re doing after filing too soon, opting not to work with a professional may be the second biggest mistake you make.