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How to suspend Social Security benefits and when it makes sense to do so

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Social Security doesn’t usually offer a “do-over,” but retirees can turn to this option in a few select cases. For those who find they can get by without their monthly benefit check, for now, suspending it could help secure a larger payout later. But don’t get this strategy confused with a withdrawal of Social Security benefits, a strategy that operates in other circumstances.

Here’s what to know about suspending Social Security benefits and when someone might want to.

What does suspending Social Security mean?

Suspending your Social Security means one exact thing, though many retirees may mix it up with a similar process called withdrawing your benefits.

Suspension of Social Security

If you’ve reached full retirement age – which varies based on the year you were born – and are not yet 70, then you can suspend your retirement benefits. The key phrase here is “if you’ve hit full retirement age.” If you haven’t, then you cannot suspend your benefits.

Suspending your benefits can provide advantages, all revolving around increasing your income.

“If you continue to work or have other income sources and do not need the Social Security benefit, it can be beneficial to suspend them so that you will earn a higher amount in future years when it may be needed,” says Shelli Woodward, a tax analyst at Merchant Maverick, an advisor for small businesses.

For every year that you suspend benefits, the monthly payout will increase 8 percent, for those born in 1943 or later, says Andrew Latham, CFP, managing editor of SuperMoney.com.

“For example, let’s say you were born on New Year’s Day in 1955,” says Latham. “You could have started receiving your regular benefits in December of 2020. However, you could increase your benefits by up to 132 percent if you suspended benefits until December 2024.”

It’s key to know that suspending your benefit to get that 8 percent annual increase works only until you turn age 70. So the most you could receive is 132 percent of your full retirement benefit.

You may make the request orally or in writing, and benefits will be suspended the month after you make the request. If you suspend your benefits, they’ll automatically restart when you turn 70 years old, though you can restart them any time. This calculator helps you estimate your future payout.

Additionally (and unlike the withdrawal of benefits approach below), you don’t need to pay back the money you’ve already received from Social Security.

Withdrawal of Social Security

If you’ve changed your mind about receiving Social Security, you can file for a withdrawal of benefits at any age. You can cancel your benefits – technically called your primary insurance amount (PIA) – as much as 12 months after you first become entitled to them.

“The Social Security Administration will then treat you as though you never enrolled,” says Bruce G. Kaserman, an investment advisor at Portfolio Medics in Vienna, Virginia. “Your PIA can then continue to grow until you decide to take benefits again.”

This “do-over” allows you to amass a higher payout later on, in accordance with the usual Social Security benefit adjustments. However, a withdrawal requires you to repay any money you’ve received, including benefits to a spouse or child and any withheld money such as for Medicare.

If you want to withdraw your benefits, you’ll need to file Social Security Form SSA-521 and state why you want to do so. Additionally, anyone who receives benefits on your account must also consent to the withdrawal in writing. You’re limited to one withdrawal per lifetime.

If you’re thinking of filing a withdrawal, make sure to hit that 12-month limit deadline. Otherwise, you may end up trapped in Social Security until you hit full retirement age and can suspend your benefits. For example, you could file for early benefits at age 62, but decide at 64 that you no longer need them because you found a job. However, you won’t be allowed to suspend your benefit until you hit full retirement age, which may be as late as age 67.

When does it make sense to suspend Social Security benefits?

Deciding to take a “do-over” on your Social Security benefit depends on a lot of factors. But some of the biggest include changing expectations for your longevity, a new financial situation (perhaps because of a job) or even a planning strategy with a spouse to max out your benefit. But all of these factors revolve around getting the most after-tax benefit out of the program.

  • Longer life. If you anticipate living longer than you previously thought, then it may make sense to suspend your payouts and try to rack up the biggest benefit you can. You can undertake a break-even analysis to figure out what makes the most sense. But if you’re married, you do want to factor in when your spouse takes benefits and how that affects your total payout.
  • Taxes. If you’re working when you collect Social Security, you can have a lot of your benefit eaten up by onerous tax rules, especially if you file early. “You already are losing 25 percent for taking benefits early, and for every $2 you earn over $19,560, you will lose $1 of benefits,” says Chuck Czajka, Certified Social Security Claiming Strategist (CSSCS) and founder of Macro Money Concepts in Stuart, Florida. So you may file for benefits early, get a job and realize your after-tax benefit isn’t what it should be.
  • Misunderstanding. “A person who starts collecting at a younger age may not realize that they are locking in a lower monthly benefit amount than what they are entitled to if they wait until they are older,” says Chris Orestis, president at The Retirement Genius, a company specializing in retirement issues.
  • Medicare costs. Retirees often have Medicare premiums withheld from their benefits, so if you withdraw or suspend your benefit, you’ll need to front any payments yourself. “If you are using the supplemental Medicare Part B insurance, you will be billed separately if you wish to continue that coverage until benefits are resumed,” says Woodward.
  • No one on your record. If no one else is claiming benefits on your record, it may make sense, too. “Don’t forget that if you suspend your retirement benefit, it also means anybody who receives benefits on your record, with the exception of a divorced spouse, won’t be able to receive benefits during the time your benefits are suspended,” says Latham. “Also, any benefits you receive on someone else’s record will also be paused.”
  • Able to afford it. If you’re holding out for a higher benefit, then you’ll need to be able to cover your expenses until your benefit restarts. And if you’re taking a withdrawal of benefits, then you’ll need to be able to afford your living expenses as well as the repayment of any amount that you’ve already received – a tall order.
  • Other circumstances. A suspension or withdrawal of benefits may make sense in other cases, depending on exactly the circumstances, such as “collecting survivor benefits for a widow or widower and dependents, collecting on a spouse’s benefit versus your own in the case of divorce, or a re-marriage,” says Orestis.

If you do delay your payout, you still get to take advantage of the increase in your full retirement benefits as well as any cost of living adjustments (COLA) due to inflation.

“Will it be valuable?” asks Czajka. “Well, next year benefits will increase due to the high cost of living. The talk is somewhere around 9 percent. If you delay benefits, you will earn a deferred retirement credit of 8 percent. The COLA benefit increase will be based upon that high number.”

Bottom line

Making decisions surrounding Social Security can be complex, to say the least. The program offers so many choices, and your longevity is unknowable, making a good decision tough. That’s why finding a financial advisor who will work in your best interest is so vital.

“Like all retirement income planning, it’s important to work with a specially trained financial advisor who knows about claiming strategies,” says Czajka. “Look at all the options before pulling the trigger.”

Written by
James Royal
Senior investing and wealth management reporter
Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more.
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