The great thing about Social Security is that you're not locked into a single age to claim benefits at. Rather, you get a range of choices.
The earliest age you can sign up for Social Security is 62. But for each month you file before reaching full retirement age (FRA), your monthly benefit gets reduced. And the earlier you file, the more of a hit your benefit suffers.
You can also opt to delay your filing past FRA. For each month you hold off, your benefit gets a small boost, and delaying your claim a full year will give you a benefit that's 8% higher than what it would've been at FRA.
Once you turn 70, you can no longer accrue credits for delaying Social Security, so it pays to sign up at that point. But all told, you have an opportunity to grow your monthly benefit quite nicely should you decide to take it.
Most seniors, however, don't delay their filings. Instead, they claim benefits at the earliest possible age of 62.
That's a route you might take yourself. But what if you regret it afterward?
When you've filed too soon
Seniors are often surprised to see how expensive retirement is. And if you file for Social Security early and slash your monthly benefit, you might really start struggle to make ends meet.
The good news, though, is that you're not totally stuck if that happens to you. Social Security will give you one do-over in your lifetime. But you'll need to act quickly to take advantage of it.
A second chance to file
The Social Security benefit you start out collecting will be the benefit you're stuck with for life (not counting annual cost-of-living adjustments). But if you manage to undo your filing in time, you can open the door to a more generous benefit.
To undo your filing, you need to do two things:
- Withdraw your application for benefits within a year
- Repay all of the money you received from Social Security within a year
The first part is clearly a lot easier to manage than the last part. But if you regret filing early and are able to repay that money, you'll then have an opportunity to sign up for Social Security at a later age -- and snag a much higher monthly benefit as a result.
How might you come up with the money to repay your benefits? There are different options you can look at.
First, if you're working part-time, you can try banking your earnings and using them to repay your benefits. You can also consider taking some money out of your savings to repay the Social Security Administration -- but only if doing so leaves you with enough cash to cover your living costs.
Additionally, you can use windfalls to repay your benefits. If you get a giant tax refund, for example, that could help a lot.
Ultimately, many seniors aren't able to undo their Social Security filings because they can't come up with the cash to repay the benefits they received. But if you're able to get creative, you might manage to undo an early filing you regret -- and lock in a much higher income stream for the rest of your life.