You've just become eligible for Social Security benefits. Are you going to apply for them now, wait until your full retirement age, or delay benefits as long as you possibly can? What if circumstances change, and you determine you would be better off waiting for benefits after filing?
You may be in luck. According to the Social Security Administration, you have up to one year after your initial filing date to change your mind and withdraw your claim.
Why would you want to withdraw your claim? Generally, the reason is to receive more benefits. You may claim Social Security benefits as early as 62 years old, but if you claim this prior to your full retirement age (FRA), the monthly benefit amount will be reduced.
For those who were born in 1960 or later, the FRA is 67 years of age. Monthly benefits are reduced on a sliding scale for every month between your month you file your claim and your FRA. If your FRA is 67, your monthly benefits will be reduced by a total of 30% when you claim at age 62. Conversely, for every year you delay retirement between your FRA and age 70, your benefits will increase by 8% for every year of delay. That's a powerful incentive to delay benefits.
You may also decide that you can't live on your existing benefits and you have to go back to work. In that case, you'll want to withdraw to avoid a potential reduction of your benefits because of your income.
If you do decide to withdraw, fill out Social Security Form SSA-521 and provide the reason for your withdrawal. If the request is approved, your benefits will cease. You'll have to repay all the benefits you and your family already received – including Medicare premium deductions, voluntary tax withholdings, and garnishments. You'll be billed separately for Medicare B premiums after withdrawal, so be sure to make arrangements to avoid missing payments in the transition month.
You may choose to withdraw Medicare coverage as well, but there are ramifications – check the Social Security website for details.
What happens if you change your mind again after you've changed your mind? You may cancel an approved withdrawal within a sixty-day window. Beyond that, you'll lose your benefits for the interim period from the original application.
You're limited to one withdrawal of benefits over the course of your lifetime. However, if you've already used up your withdrawal request, or you simply waited too long to withdraw your benefits, you can ask for a voluntary suspension of your benefits if you are below age 70. You may then restart your benefits at any time – or, if you wait until age 70, they will automatically restart.
Suspending your benefits will have ripple effects – for example, benefits will be suspended for others who receive benefits on your record (except for divorced spouses). If you have Medicare Part B supplemental insurance, the payments can't be deducted from your benefits and you'll be billed separately.
As retirement approaches, you should plan out your expected income needs to know when to start drawing Social Security benefits – but you can take comfort in knowing that you have a chance to change your mind within the first year if you guessed incorrectly.
If you need help with your decision to file, or whether to reconsider your decision, contact your local Social Security Administration office. They will be glad to discuss the pros and cons of filing strategies, so you can make the most informed choice.
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