There are two ways you can change your mind after you have already claimed your Social Security benefits. You may be aware of one way to change your mind, but hardly anybody is aware of the second option.
When you claim your Social Security benefits is one of the biggest financial decisions you will make in your lifetime. After making that decision, you want to be sure you made the right decision. Because you will receive that benefit for the rest of your life.
Is it possible to change your mind after you have already claimed your Social Security benefits?
What happens if you claimed your benefit at age 62, and later regretted that decision? What if you wish you had delayed, and had your benefit grow by 6% – 8% per year for every year? Or what if you retired at 62, claimed your benefits, and then received an incredible job offer?
The first way you can change your mind after you have already claimed your Social Security benefits:
There are two ways you can change your mind after already claiming Social Security benefits. The first way is only works if you had been receiving your benefits for less than 12 months. If you can pay back everything you received, Social Security will consider you to have never claimed your benefits.
Rachel has a Full Retirement Age of 66. Her Social Security benefit statement says if Rachel waits until then to claim, her monthly benefit will be $2,000.
But she decides to claim at age 62, prior to her Full Retirement Age, and her monthly benefit is reduced to $1,500 per month.
Claimed for Less than 12 Months:
After 6 months of receiving benefit payments, she regrets her decision, and wishes she had not claimed her benefits early. Because she had not been receiving benefits for more than 12 months, she could pay back all the benefits received so far. It will be as if she never claimed her benefits at all.
She has been receiving benefit payments of $1,500 per month for 6 months. That means she received a cumulative total of $9,000 ($1,500 x 6 months) over that 6-month period.
If she pays back the cumulative total of $9,000 of benefits received during that 6-month period, then Social Security will consider Rachel to have not claimed her benefits yet. Her benefit will grow by a minimum of 6% – 8% per year for every year she delays up to age 70.
Many people are somewhat aware of this first option. Changing your mind in the first year of claiming your Social Security benefits, then paying it all back. But there is a second way to change your mind that very few people are aware of. This second option involves suspending your benefits at your Full Retirement Age.
The second way to change your mind after you have already claimed your Social Security benefits:
To illustrate this second option, let’s assume that you retired and claimed your reduced benefits at age 62. Now you are 65, realize you are bored with retirement, and want to go back to work. In this case, you would have been collecting benefits for over 12 months already, meaning option one can’t apply.
Your job pays you a large income, and you really don’t need your Social Security benefits. But you have already been receiving benefits for over two years.
This is where the second option comes into play.
You can “suspend” your benefits, which means you will stop receiving your monthly benefit. Every year your benefit is suspended, it will grow by a minimum of 8% per year up until age 70. And if there are any COLA increases while the benefit is suspended, you can add it on top of the 8% increase.
If you suspend your benefits at 66, then unsuspend four years later at 70, your benefit would be a minimum of 32% larger than the benefit you suspended. With a bit of inflation and annual COLA increases, your age 70 benefit could easily be over 40% bigger.
Let’s look at some real numbers with an example:
Pretend these numbers represent a real person, Mark, and his benefit amounts.
Mark had a full retirement age benefit of $2,000 per month. But he claimed his benefit early, at age 62. And as a result, the amount of his monthly benefit was reduced to only $1,500 per month. We assumed an annual COLA increase of 2.5% per year, and that is why his monthly benefit increases. His monthly benefit grew to $1,537 at age 63, $1,575 at age 64 and $1,615 at age 65. Once again, his monthly benefit grew bigger each year because of the assumed annual COLA increase of 2.5%.
Between 65 and 66 he gets a great offer from his old employer to come back to work. The money is too good to pass up, and Mark decides to take the offer and go back to work. And because he is earning a good income now, he doesn’t need his Social Security benefit. At this point, he has been receiving benefits for 3–4 years, and doesn’t have the option of paying it back.
So Mark chooses the second option.
Once he reaches his Full Retirement Age of 66, he can “suspend” his benefits. Suspending his benefits will stop his monthly Social Security benefit, and it will now grow by a minimum of 8% per year up until age 70.
At age 70 his benefit is unsuspended, and he begins to receive a monthly benefit of $2,411. When Mark suspended his benefit at age 66, he was only receiving $1,615 per month. When his benefit was unsuspended at age 70, it had grown to $2,411 per month.
With the annual COLA increases added to the minimum annual increase of 8%, he increased his monthly benefit by $796 per month. That’s $9552 per year ($796 x 12), which is almost a 50% increase!
And you don’t have to wait until age 70 to unsuspend your benefit. You can unsuspend it anytime between your Full Retirement Age and age 70.
Can Suspend Benefit at age 67, 68 or 69
If Mark was 67, 68, or 69 when he went back to work, he could suspend his benefits any time. He would receive the minimum increase of 8% per year, and receive the maximum increase in his monthly benefit if he unsuspends it at age 70. He could unsuspend his benefit before age 70, but he will not receive the maximum increase. If he unsuspends prior to age 70, it will be less than the benefit amount he would have received had he waited.
You Can Suspend Benefit For ANY Reason!
In this example, the reason Mark suspended his benefit was because he went back to work and did not need Social Security income. But you can suspend your benefit for any reason or no reason at all.
As long as you wait until your Full Retirement Age or later, you can suspend your benefit. You can also unsuspend your benefit at any age up until age 70. But if you wait until age 70 to unsuspend your benefit, you will receive the maximum increase possible.
Many people think that you can’t change your mind after you have already claimed your Social Security benefits. They believe that they will have to live with that decision for the rest of their lives. But it turns out that is not always the case. In the right situation, these are two ways you can change your mind after you have already claimed.