Gary W. Pelletier, CLU, ChFC, AIF®

Northeast Planning Associates, Inc.

Corporate, Estate

& Financial Planning


A Do-over on Your Social Security Claiming Decision?

| September 26, 2017
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There are situations when requesting a “do-over” would be ideal.  Think about when you respond to your spouse thoughtlessly – as it leaves your lips you probably immediately apologize and call for a do-over.  When you’re playing tennis against an opponent and there’s disagreement or doubt surrounding a play – it’s often best to just replay the point. 

But what about when you start to doubt whether claiming Social Security benefits when you did was the right decision?  There are options here too.

While recent law changes eliminated some of the options to re-do a Social Security claiming decision, there are still a couple options that will essentially allow you to change your claiming decision.

Within 12 Months of Benefits Beginning:  If you are within 12 months of Social Security retirement benefits beginning, you have the option to withdraw your application, re-pay any benefits received and experience a complete do-over.  Take Bob, who at age 62 decided to begin receiving benefits.  Bob is not in great health, with a life expectancy of 75, so he thought taking benefits early would make sense.  Bob is married to Jane (age 60) who is homemaker in great health, with a life expectancy of 85.  Bob realizes after talking to his financial advisor a few months after beginning benefits that his wife’s spousal benefits based on his record would be permanently reduced due to his early claim.  He decides it’s in his and Jane’s best interest to wait instead until his full retirement age of 66 to claim benefits.  Bob has the option to complete Form SSA-521 – Request for Withdrawal of Application and pay back all prior benefits received.  Keep in mind that if any spousal or children’s benefits based on your record have been received, if you withdraw your application that those benefits need to be paid back as well – ex-spouses are excluded from this requirement.  Also, anyone receiving benefits based on your record would need to consent to this re-do strategy in writing.

After 12 Months of Benefits:  Many people are familiar with the fact that if you wait until up to age 70 to claim benefits, your full retirement age benefit will earn delayed retirement credits of 8% per year.  If you’ve already claimed Social Security benefits, there’s a strategy that will allow you to suspend receipt of those monies and still earn those retirement credits.  Let’s use Bob again, but this time he doesn’t realize he wants a do-over until after 12 months.  Once he reaches his full retirement age (66) he can suspend his benefits up to age 70 and earn 8% credits on the amount he was receiving while he waits.  Bob’s full benefit amount is $2,000/month.  Since he claimed benefits early at 62, he is entitled to 75% of this amount, or $1,500/month.  He will collect this amount until his age 66.  Bob decides to suspend his benefit at this point until age 70.  Once he begins receiving benefits again, his monthly amount will be $1,500 x 1.32 = $1,980/month (the 1.32 is based on 8% per year for 4 years).  It’s important to note that anyone receiving benefits on Bob’s earnings record (except for an ex-spouse) will also stop receiving benefits while his own is suspended.

Whether you have already receiving benefits or are looking at your options now, we can help you make an informed decision that is best for you and your family – even if that means calling for a “do-over.”

Content in this material is for general information only and not intended to provide specific financial, tax or legal advice or recommendations for any individual. The examples presented are hypothetical and are not representative of any individual situation.

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