You started taking your Social Security benefit. It seemed like the right thing to do at the time, but now you’re not sure. It could be that the economy was bad when you retired and things have improved, or you took early retirement but you’ve decided you want to keep working, or you’ve discovered that you can live comfortably without the Social Security check and you’d like to collect a bigger benefit later on. The good news is, you can stop receiving a Social Security check now and turn it back on later. There are two options.
Withdrawal of Benefits
There is a timing element to withdrawal of benefits. Social Security will let you withdraw your original application for retirement benefits only once, and it must be within 12 months of the date you first claimed your benefits. You fill out Social Security form SSA-521 and send the form to your local Social Security office.
If you choose a withdrawal, Social Security will treat it as if you never applied for benefits at all as long as you pay back all the money you’ve received since getting your first check plus any benefits paid to your spouse or kids and any money Social Security withheld, such as Medicare premiums.
Here’s what it might look like. For a 62-year-old who was born after 1960, the retirement benefit would be 30% less for retiring at 62 compared with the full retirement age of 67. And if that person waited until 70, they’d receive 124% of their full retirement age benefit. The difference between 70% of your benefit and 124% could amount to hundreds of dollars a month.
If you change your mind about a withdrawal of benefits, Social Security allows you to cancel your request within 60 days from the date they approved your request to withdraw.
Suspension of Benefits
If you’ve been getting retirement benefits for more than a year, withdrawal is not an option. However, once you reach full retirement age you can request a suspension of benefits.
Unlike a withdrawal, you don’t have to pay anything back, even if you’ve been retired for several years. During the suspension of benefits, you receive delayed retirement credits, which increase your benefit by 8% for every year you don’t begin benefits once you reach Full Retirement Age (FRA). You can ask Social Security to reinstate your benefits any time before you turn 70, at which point SSA will do it automatically.
Family Consequences
Whether you choose Withdrawal of Benefits or Suspension of Benefits, if your spouse and/or children have been receiving Social Security Benefits based on your work history, they will no longer receive those benefits. Only when you reinstate your benefit will your family members be eligible to have their benefits turned on again. The only exception is if you suspend your benefits, and your ex-spouse is receiving benefits based on your work record. In that case, the ex-spouse will continue to receive benefits.
Disclaimer
This information is presented for informational purposes only and does not constitute an offer to sell, or the solicitation of an offer to buy any investment products. None of the information herein constitutes an investment recommendation, investment advice or an investment outlook. The opinions and conclusions contained in this report are those of the individual expressing those opinions. This information is non-tailored, non-specific information presented without regard for individual investment preferences or risk parameters. Some investments are not suitable for all investors, all investments entail risk and there can be no assurance that any investment strategy will be successful. This information is based on sources believed to be reliable and Alhambra is not responsible for errors, inaccuracies, or omissions of information. For more information contact Alhambra Investment Partners at 1-888-777-0970 or email us at [email protected].
