What's Happening
6 minutes ago

Spire Global Stock Is Plunging After Hours: What's Going On?

benzingabenzinga.com
9 minutes ago

Here's How Much $1000 Invested In Travelers Companies 20 Years Ago Would Be Worth Today

benzingabenzinga.com
10 minutes ago

Trump Administration Secures Release Of Cannabis Prisoner Marc Fogel From 14-Year Russian Sentence

benzingabenzinga.com
16 minutes ago

Netflix Stock Near All-Time Highs: New Las Vegas Restaurant With Food Inspired By Stranger Things, Squid Game & More Could Diversify Revenue

benzingabenzinga.com
24 minutes ago

Gilead Sciences Shares Push Higher After Q4 Report: Here's Why

benzingabenzinga.com
36 minutes ago

Confluent Stock Surges On Q4 Earnings Beat, Total Revenue Up 23%

benzingabenzinga.com
41 minutes ago

Here's How Much $1000 Invested In Marathon Petroleum 5 Years Ago Would Be Worth Today

benzingabenzinga.com
42 minutes ago

Zillow Stock Slides After Q4 Earnings Miss Estimates: Details

benzingabenzinga.com
55 minutes ago

Booking Enters Historically Strong Trading Window Ahead Of Earnings

benzingabenzinga.com
59 minutes ago

Lyft Q4 Earnings: Revenue Beat, Gross Bookings Up 15%, New Buyback — 'Our Biggest Competition Is Inertia'

benzingabenzinga.com
1 hour ago

DoorDash Shares Climb After Solid Q4 Results: Total Orders Grew 19%, GOV Increased 21%

benzingabenzinga.com
1 hour ago

Super Micro Reports Preliminary Q2 Earnings, Company Expects To File Delayed Reports In Coming Weeks

benzingabenzinga.com
1 hour ago

Robinhood Q4 Earnings Preview: Can Company Rebound From Q3 Miss? Key Items To Watch

benzingabenzinga.com
1 hour ago

$1000 Invested In United States Steel 5 Years Ago Would Be Worth This Much Today

benzingabenzinga.com
1 hour ago

Upstart Shares Soar After Solid Q4 Report, Strong Q1 Guidance

benzingabenzinga.com
1 hour ago

Interactive Strength Shares Are Trading Lower Today: What's Going On?

benzingabenzinga.com
2 hours ago

12 Consumer Discretionary Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com
2 hours ago

12 Health Care Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com
2 hours ago

12 Industrials Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com
2 hours ago

12 Information Technology Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com

2 Little-Known Social Security Rules Everyone Needs to Know by the Time They Reach 62

The decision facing many seniors about when to claim Social Security can be daunting. Claiming at age 62, when most people first become eligible for benefits, is a popular choice. You’ll get an infusion of cash to supplement any income and retirement savings you have, which could enable you to retire earlier.

There’s a price, however. Your monthly benefit will be permanently reduced by claiming early. You’ll receive just 57% or so of the benefit you would have received if you had waited until age 70, when your benefits max out.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Numerous studies show most people would be better off waiting until age 70 to claim Social Security benefits. At the same time, everyone’s personal circumstances are different, so it might make sense for you to claim much earlier.

Adding to the challenge is that your circumstances could change after you decide to start Social Security. That could make what was a good decision at the time result in a poor outcome for you and your family.

Luckily, the Social Security Administration understands the importance of the decision and provides a bit of lenience for anyone claiming benefits early. There are two rules that could help you mitigate any negative outcomes of that choice. Knowing them before you claim can make you more confident in your decision.

A stack of Social Security cards.

Image source: Getty Images.

Social Security has an “undo” button

The first rule to know before reaching age 62 and potentially claiming Social Security is that you can withdraw your application if you change your mind.

You get one year from starting Social Security to withdraw your application by filing form 521. If the Social Security Administration accepts your withdrawal, you’ll have to return everything you received from the program up to that point. That includes the monthly benefit plus any amount withheld for Medicare premiums or taxes.

The Social Security Administration will let you know exactly how much you’ll need to repay when they send you a notice that your withdrawal is approved. If you realize you’re unable to repay your benefits, you’ll have 60 days to cancel an approved withdrawal application.

If you successfully withdraw your application, you’ll completely undo your initial Social Security claim. You’ll become eligible for a bigger monthly benefit, and that benefit will increase every month you wait to apply again, up until age 70 (when benefits stop increasing each month).

The Social Security rules allow you to withdraw your application just once per lifetime. If you claim benefits again, you’ll be stuck with that decision, even if you change your mind again. The good news, though, is you can do something about it once you reach full retirement age.

What to do when you can’t withdraw your application anymore

If you’ve already withdrawn your application previously or you’re past the deadline, you can still take advantage of another rule in the Social Security laws. Once you reach full retirement age, you can suspend your benefits.

Your full retirement age depends on when you were born. Those born between 1943 and 1954 reached full retirement age at 66. Your full retirement age will increase by two months for each year you were born after 1954 until maxing out at age 67 for anyone born in 1960 or later.

If you decide to suspend your benefits, you’ll stop receiving a Social Security check each month. Instead, the government will credit your account with delayed retirement credits, which are worth 2/3 of a percentage point of the benefit you were previously receiving for each month you delay benefits.

You’ll stop accruing delayed retirement credits at age 70. That means that someone with a full retirement age of 67 who suspends their Social Security the month of their 67th birthday could increase their monthly benefit 24%. That’s on top of the annual cost-of-living increase (COLA) you’ll still receive.

There are a few drawbacks to suspending benefits besides no longer receiving monthly checks from the program. First, anyone collecting benefits based on your earnings record (a spouse or minor child) will revert to collecting benefits based on their own record, if eligible. Second, if you’re on Medicare, you’ll be responsible for paying Part B premiums out of pocket. The Social Security Administration generally deducts your premiums from your monthly check, but it won’t have a check to deduct that payment from if you suspend benefits. Medicare Part B premiums start at $185 per month in 2025.

If you don’t resume your benefits before reaching age 70, the Social Security Administration will automatically restart your benefits the month of your 70th birthday. That’s when you’ll receive your new, bigger payout.

Make a confident decision knowing there’s a safety net

Maybe you’re on the fence about whether you should start Social Security or not. Being able to withdraw your application or suspend benefits down the line can help you avoid getting stuck with the wrong decision. As long as you know the rules, you can do what’s best now and act accordingly if things change in the future.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.

Related Posts

Image source: Getty Images The best credit cards have a lot of perks — cash back, travel rewards, purchase protection, and more. But what happens

Social Security benefits for spouses are a common source of confusion. MassMutual reports that 25% of surveyed adults near retirement age were unaware that spouses

Image source: Getty Images Most people pay their credit card bill once a month, but you’re allowed to pay more frequently. Technically you can pay

The latest cover of Time magazine shows Elon Musk sitting at the historic Resolute Desk in the Oval Office with the U.S. flag and the