Can I Stop Social Security Benefits and Restart Them Later to Get a Bigger Payment?
- You can file for withdrawal of benefits, or suspend Social Security benefits after reaching full retirement age, to increase your maximum benefit payment. But there are restrictions. You have one year (12 months) to withdraw and you must pay back benefits that you have already earned.
The Covid-19 pandemic has caused many workers to suffer job loss or reductions in income. Older workers have not been spared and, as a result, many have decided to start collecting their Social Security benefits early, before reaching full retirement age. While this brought them needed income, it also meant they were unable to wait until their benefits reached their maximum levels.
The good news is that many workers who elected to collect benefits early can stop receiving them and then restart benefits later when they can get a bigger payment.
However, there are limits to this option.
Timing Social Security Benefits
Anyone who has qualified can begin collecting benefits at age 62. At this age, you would receive the lowest amount of benefits. The amount rises as you keep working until you reach full retirement age, which currently is between 66 and 67, depending on your birth year. And if you wait until age 70, the amount continues to rise to its maximum amount.
That’s why most financial advisors suggest waiting until at least full retirement age to get the most value from your hard-earned Social Security benefits.
Withdrawal of Benefits
Suppose you lost income at age 62 or 63 and filed for Social Security. Later, you were rehired at your old job, got a new job, inherited some money or decided you could live without Social Security benefits for a few more years. If you filed before full retirement age, for whatever reason, you have 12 months to apply to Social Security for a “withdrawal of benefits.”
The withdrawal of benefits process begins with filing Social Security form SSA-521 and sending it to your local Social Security office. You must include the reason why you want to withdraw the application on the form.
Social Security will then remove your earlier application, as if you never applied for benefits. But you are required to repay every dollar you received from Social Security up to that point, including:
- Your monthly retirement payments
- Any family benefits collected by a spouse or children (who must consent, in writing, to your withdrawal application)
- Any money withheld from your payments by Social Security to pay for other benefits, such as a Medicare premium or taxes
You are not required to pay any interest earned on those benefits.
You are only allowed to withdraw benefits once in your lifetime.
Suspension of Benefits
After 12 months of receiving retirement benefits, you are no longer allowed to apply for withdrawal. However, you still have an option to increase your benefits.
If you have reached your full retirement but are not yet age 70, you can ask SSA to suspend your retirement benefit payments. During a suspension, you stop receiving benefits and then continue to accrue retirement credits that increase your benefit until you reinstate your claim for benefits. You can ask Social Security to reinstate benefits at any time until age 70. At that age you automatically receive benefits.
You can suspend benefits by making an oral or written request to the SSA. To restart payments before age 70, you must contact the SSA orally or in writing as well.
By suspending benefits until age 70, your benefit amount grows by 8% each year it is suspended. After age 70, though, it stops growing, so there is no benefit in waiting past 70.
Withdrawing Your Withdrawal
If you change your mind about a withdrawal of benefits, you have 60 days to cancel that request. Those 60 days begin with the date Social Security approves your withdrawal.
The SSA-521 form also asks if you want to keep collecting Medicare benefits. If you qualify for Medicare, you can stay on the program if you want to. “If you don’t,” AARP notes, “there are numerous implications both for any health care benefits you’ve already received and for re-enrollment in Medicare at a later date.”
Speak to a Financial Advisor
Understanding Social Security benefits is difficult under normal circumstances. It gets even more complicated if you are considering withdrawing or suspending your benefits.
That’s why it’s a good idea to talk to a financial adviser to navigate Social Security and your other plans as you prepare for retirement.