Many seniors rush to claim Social Security early because, well, they can. After all, it's tempting to get your hands on money as soon as it becomes available to you.
You're entitled to your full Social Security benefit based on your personal wage history once you reach full retirement age (FRA). FRA kicks in at 66, 67, or somewhere in between, depending on what year you were born in.
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But you're allowed to sign up for Social Security starting at age 62. And while doing so means accepting a lower monthly benefit for life, many seniors are willing to give up a higher payday to get their money immediately.
The difference between filing for Social Security at 62 versus FRA can be huge, though. And even if you only claim benefits a couple of years early, you'll still be looking at a notable reduction.
If you claimed benefits early, you may now be realizing what a mistake it was. After all, retirement can be expensive when you consider your various costs, from housing to healthcare to food. And while you may also have savings to tap, you don't want to spend your nest egg down too quickly because that money needs to last many years.
But don't sweat it if you claimed Social Security early and are now stuck with a benefit that's lower than you'd like it to be. You can still do your part to raise your benefit. But you'll need to move quickly.
Is it time for a do-over?
It's a little known fact that every Social Security filer gets a single do-over in their lifetime when it comes to claiming benefits. If you filed for Social Security early and now regret it, you can undo your filing by doing two things:
- Withdrawing your benefits application
- Repaying all of the money in benefits you've received to date
Keep in mind, though, that you only have a 12-month window from your initial filing to make that do-over happen. So if you're nearing the one-year mark, don't delay.
Of course, you might have to make some change to your lifestyle if you want the option to hold off on Social Security and wait things out for a higher monthly benefit. Those could include going back to work in some capacity (possibly even full-time) or making adjustments to your expenses, like downsizing your home. But those sacrifices may be worth it if it means getting to snag more money from Social Security on a monthly basis throughout retirement.
Remember, the money you have in your IRA or 401(k) is not guaranteed to last throughout your senior years. Social Security, on the other hand, is set up to pay you a monthly benefit for the rest of your life. If you want a larger benefit than what you've locked in, take advantage of that do-over, wait a few more years, and get ready to collect a more generous paycheck that will make your ongoing retirement expenses much easier to manage.
