Q. I claimed Social Security benefits at 62, and I’m realizing that it’s too early. I am concerned that since I made the decision, I’m going to have to live with it. Will I be stuck with a reduced benefit for life, or can I change my mind? If I can change my mind about Social Security, do I need to do the same for Medicare? What else should I keep in mind when it comes to Social Security, so I don’t make any other errors. Thanks for your help!
A. April is National Social Security month and is therefore an ideal time to cover the topic of Social Security, when to take benefits, and what to do in a situation where you may have claimed too early.
We all make mistakes. Some of us make non-financial ones, such as drinking too much caffeinated coffee in the evening or overdoing it playing a sport. Another kind of mistake that many make and often regret are those related to Social Security. Here are ten things you should know about Social Security, including the answer to your question about whether there is a do-over:
1. Claiming Social Security too early: If you’ve been receiving benefits for less than a year, then thankfully, you’re not too late to change your mind. Social Security gives you a single do-over in your lifetime, and if you take advantage of that option in time, you can withdraw your application, file again at a later point, and avoid a long-term reduction in your monthly payments.
However, undoing your decision isn’t easy, because to complete the process, you’ll need to repay all of the Social Security benefits you’ve already collected. This also includes any spousal benefits that your partner may have received based on your work record and any money that was withheld from your benefits, such as the cost of your Medicare premiums.
Just because you’re withdrawing your Social Security application doesn’t mean you need to do the same for Medicare. However, if you’d like to continue receiving health benefits, you’ll just need to start paying your premiums directly if you were having them deducted from your benefit payments before.
Note that if you’ve been collecting Social Security for more than 12 months, withdrawing your application isn’t an option.
2. Knowing your full retirement age: Your full retirement age is the age at which you can start collecting the full benefits to which you’re entitled. It’s important to know that age because it’s likely to be a key part of any Social Security strategizing you may do. The full retirement age was formerly age 65 for everyone, but it’s now 66, 67, or somewhere in between for most of us. Click here for more details from the Social Security Administration (SSA) on your full retirement age.
3. Make sure the SSA has your earnings correct: Make sure the SSA has your earnings correct. The SSA keeps records of your earnings history in order to calculate your benefits correctly. Social Security payments are based on the top 35 years of your earnings after indexing for inflation, so accurate information is critical to avoid getting less than you deserve. In order to check your earnings history, be sure to create a “mySocial Security” account. This is where you’ll find your personal information and can check to ensure its accuracy. If there are mistakes, you’ll have the chance to contact the SSA to have the situation fixed.
4. Estimate your benefits: Get an estimate of how much you’ll receive from Social Security. The SSA provides a number of calculators and other tools to help you estimate what your Social Security income will be under various situations.
5. Know how to maximize your Social Security check: For every year beyond your full retirement age that you delay starting to receive benefits, you’ll increase their value by about 8% — until age 70. So, delaying from age 67 to 70 can leave you with checks about 24% bigger! For those who collect earlier, this works in reverse. For every year before your full retirement age that you start collecting, your benefits will shrink by about 7%. So, if your full retirement age is 67 and you start collecting benefits at age 62, your checks will be about 30% smaller.
6. Don’t start collecting if you are working: It can be a mistake to start collecting while you’re still working — or to take on a job with significant income while you’re collecting benefits. Why? If you earn too much, you can have some of your benefits withheld. You may even end up with your benefits taxed.
7. Learn how to apply for benefits online: The SSA’s online system makes applying for benefits quite easy. You can apply not just for retirement or disability benefits, but also for Medicare using the SSA’s online application system. This makes things as convenient as possible for those seeking benefits.
8. Keep the SSA informed of changes: If you move, be sure to change your payment or direct deposit information, or if you want a benefit verification letter for credit purposes, know that the SSA offers those options. Be sure to keep up and ensure that the SSA can keep track of you and be there when you need it.
9. Know about spousal benefits: If you have been married for at least 10 years, and have not remarried before age 60, you may be eligible for spousal benefits from Social Security, but your spouse must file for their own benefit before you can file for spousal benefits.
You must be 62 years of age with a spouse who is currently receiving (or has filed for) retirement or disability benefits in order to file for or receive spousal benefits. Current, widowed and ex-spouses are eligible for Social Security spousal benefits. However, the age at which you begin taking spousal benefits will affect the amount you are able to claim. In order for you to receive the full amount of benefits, your working spouse must be at the full retirement age – meaning that they are able to claim 100% of their benefits (and therefore the spouse would be able to claim 50%).
10. The “Claim Now, Claim More Later” strategy ends in 2019. The “Claim Now, Claim More Later” strategy is based on the fact that married individuals are entitled to either a Social Security benefit based on their own earnings or to a spousal benefit equal to one-half of their spouse’s full retirement benefit. So, when those who utilize this strategy (before the end of 2019) reach full retirement age, you can choose which benefit to take. If you choose the spousal benefit, you can continue building up delayed retirement credits for your own benefit. Then at age 70, you can claim your own maximum retirement benefit and stop receiving the spousal benefit. Read more about the “Claim Now, Claim More Later” strategy in our recent article on the subject.
Be Knowledgeable About Social Security to Make Informed Decisions
It’s worth learning more about Social Security, so that you make smart decisions in order to get as much as you can out of the program. By following the steps above, you’ll get a much better understanding of what Social Security will bring to the table when you need it.
Plan Ahead for Retirement and Long-Term Care
Here at the Farr Law Firm, we stay on top of the strategies you need to put in place to keep yourself and your family protected. If you’ve not done Retirement Planning, Estate Planning, or Long-Term Care Planning (or had your documents reviewed in the past 5 years – or last 3 years if you’re over 65), or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, please call us to make an appointment for a consultation:
Retirement Planning Fairfax: 703-691-1888
Retirement Planning Fredericksburg: 540-479-1435
Retirement Planning Rockville: 301-519-8041
Retirement Planning DC: 202-587-2797
About Evan H Farr, CELA, CAP
