“Maximizing Your Social Security Benefits: A Guide to Withdrawing and Suspending Claims”

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Social Security Benefit Basics

If you started receiving Social Security within the past 12 months, you can withdraw your claim and postpone collecting benefits. You’ll need to repay any benefits you’ve received so far. If you’re at full retirement age or older (age 66 or 67) but not yet 70, you can also suspend your Social Security benefits and restart them when needed. In both cases, your benefit amount will increase incrementally for every month you forgo receiving a check.

Read on to learn more about withdrawing your Social Security benefits application or temporarily pausing your benefits.

How Social Security Benefits Work

Here’s how your age may affect the size of your monthly check:

• You can begin collecting Social Security benefits at age 62, but your benefit amount will be reduced based on your age. At 62, your monthly benefit would be 30% less than what you would receive if you waited until full retirement age (67 for people born in 1960 or later).
• Your monthly benefit increases 0.67% for every month you postpone collecting benefits (a rate of 8% per year). So, if your monthly benefit at age 62 is $2,000, you could expect a monthly check of about $2,160 if you file your first claim at age 63.
• You receive your full Social Security benefit if you hold out until you reach full retirement age, currently between ages 66 and 67.
• After age 70, your benefit does not increase any further.

How Are Social Security Benefits Calculated?

To be eligible for retirement benefits, you must have worked and paid Social Security taxes for 10 years or more. Your benefits are calculated based on the following factors:

• Your earnings: Social Security uses your top 35 years of earnings to calculate your benefit.
• Your age: As noted above, your age at retirement affects how much you receive.
• Wage indexing: Social Security uses an index that adjusts for average wages over the span of your working life.
• The current cost of living: Social Security benefits are adjusted each year to reflect inflation.
• Retirement income: Social Security deducts $1 for every $2 earned over $21,240 for 2023 if you’re under the full retirement age, or $1 for every $3 earned over $56,520 for 2023 if you’re at or above the full retirement age.

What Will Your Monthly Payment Be?

Although it’s hard to pinpoint exactly what your benefits will be in the future, the Social Security Administration offers three ways to get a personalized estimate:

• Use the Social Security Quick Calculator to get an estimate of your monthly benefits based on data from your tax returns.
• Download your Social Security Statement for more detailed information on your lifetime earnings and eligibility.
• Set up a Social Security account page for interactive tools that help you estimate your benefit amounts at different ages and spousal or survivor benefits.

How Can I Withdraw a Social Security Claim?

You can cancel or withdraw your application for 12 months following approval. Here’s how:

1. Download Form 521: Request for Withdrawal of Application.
2. Complete and sign the form.
3. Mail or fax the completed form to your local Social Security office.

You’ll be required to repay any benefits you and your family have received, including money withheld for Medicare premiums, taxes, or garnishments. Canceling your benefits will also cancel benefits for your spouse or dependents. You have 60 days after approval to reinstate your application, and you can only withdraw your claim once. Reapply for benefits when you’re ready to resume your payments.

How to Suspend Benefits if You Can’t Cancel Your Claim

If you’re at or above full retirement age but younger than 70, you can also temporarily suspend your benefits in writing by calling the Social Security Administration or by visiting your local Social Security office. The agency will pause your monthly benefits until you ask that payments resume, or automatically in the month you turn 70.

Your monthly benefits will increase as if you had postponed receiving benefits while your payments are suspended.

When Does It Make Sense to Cancel Your Social Security Claim?

Here are a few scenarios when rethinking your Social Security claim might be in order:

You Need to Recalculate

Your current benefits might not be adding up if any of the following describes you:

• You realize your Social Security check isn’t enough to cover living expenses and want to work a few more years to increase monthly benefits and retirement savings.
• Your income exceeds Social Security limits and your benefits have been reduced.
• You found out you would receive more money if you claimed spousal benefits from your ex-spouse.

You’re Going Back to Work

Reasons for un-retiring include:

• You have a job offer or business opportunity you can’t resist.
• An urgent family matter is pushing you back into work; for example, you need to cover medical or care expenses for your spouse.
• You miss the structure and social connection.

You Can Live on Savings

If you can cover expenses from savings alone, should you? The math here can be complicated—and there are taxes to consider. If you’re thinking about going this route, you may want to consult with a tax or financial advisor. Here’s when you might reconsider living on savings:

• You want to balance taxable retirement withdrawals against your Social Security benefits to avoid a retirement tax bomb. By increasing future benefits—and spending down your taxable retirement now—you may be able to reduce your taxes in the future.
• You’ve received a lump sum of money that you plan to exhaust before taking Social Security payments.

Some Considerations Before Un-Retiring

You may want to think through these questions before withdrawing your Social Security claim:

• How much will your benefits increase? Say you’re planning to stop your checks and work for another year. Your monthly benefit is $2,200 now; in a year it would be roughly $2,376. But by skipping your checks for a year, you forfeit $26,400 (that’s $2,200 x 12). Before you cancel your claim, calculate how much you’re giving up vs. how much more you stand to make, annually and over the long term.
• Do you have enough saved in retirement? If your current 401(k) plan and individual retirement account (IRA) assets are looking a little thin, you might want to go back to work and save aggressively for a few years (or more). You’ll increase your retirement income and your Social Security benefits.
• Do you want to return to work? Sure, you complained bitterly about your long commute and the guy in the next office with the loud phone voice, but now going to work seems purposeful and less isolating than being at home.
• How long can you stay un-retired? The benefits of putting off benefit payments don’t last forever. Social Security benefits max out at age 70. Required minimum distributions on 401(k) and traditional IRA accounts kick in around age 73. Make sure you can pause long enough to make a financial difference.

The Bottom Line

Withdrawing your Social Security claim can increase your monthly benefit down the road, but think about whether it makes financial sense now. You may want to postpone benefits if you have work you’d like to continue or other income sources to keep you afloat in the interim.

While you’re re-evaluating your decision to retire, you can use the Personal Finances tool that comes with your Experian account for a clear view of your financial accounts in total. Whether you decide to keep or cancel your Social Security payments now, keeping a keen eye on your money is key to your long-term financial health.

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