In the face of unprecedented unemployment rates, Social Security benefits have become a critical lifeline for an expanding retirement community. The choice of when to commence claiming Social Security is a vital decision. Typically, Social Security retirement benefits can be initiated from age 62. However, delaying the commencement until age 70 can result in significantly increased monthly benefits, up to 75% more than if initiated at age 62.
For those who start receiving benefits at 62 and later decide to halt, it’s possible to withdraw the application within 12 months from the start of the benefits. This action cancels the original application, allowing for a larger benefit to be claimed at a later date. It’s important to note that this requires repaying all benefits received up to that point, including those allocated to a spouse or children. This strategy can be beneficial for those who unexpectedly come into a large sum of money, like an inheritance, and can afford to defer their benefits for a larger payout in the future.
If any funds were deducted from benefits for Medicare premiums or taxes, these amounts must also be repaid. The withdrawal process is completed by submitting Social Security Form SSA-521 to the local SSA office. Bear in mind that only a single withdrawal of benefits is allowed.
Suspending benefits is another option for those who have attained full retirement age but are still under 70. A simple oral or written request to the SSA office can suspend benefits, which will then automatically restart at age 70 unless a request for an earlier restart is made. By suspending benefits, individuals can accrue delayed retirement credits at a rate of two-thirds of 1% per month, or 8% annually, resulting in a larger annual payment upon resumption. It’s important to note that suspending benefits will also affect any benefits received by a spouse or children based on the individual’s record.
If a decision to withdraw benefits is reconsidered, there’s a 60-day window from the day Social Security approves the withdrawal to reverse the request.
Navigating the complexities of Social Security can be challenging, particularly if you’re considering suspending or withdrawing benefits. In such scenarios, professional financial advice can be invaluable. The experts at GKM are equipped to devise the most suitable Social Security strategy for every unique situation, helping to plan and make adjustments for the retirement journey ahead.
