Choosing when to claim Social Security benefits is an important decision that will affect how much you receive each month for the rest of your life. Many people simply choose to start receiving benefits as soon as they can, with nearly half of U.S. adults claiming at age 62, according to a survey from the Center for Retirement Research at Boston College.
Sometimes claiming as early as possible is the best decision, particularly if you're forced into an early retirement or need the money just to pay the bills. But it's not the right choice for everyone, and if you wait to claim Social Security, you could significantly boost your benefits for life.
Although you can file for retirement benefits as early as age 62, your checks will be reduced by up to 30% if you do so. The only way to receive the full amount you're theoretically entitled to is to claim at your full retirement age (FRA). If you were born in 1960 or later, your FRA is 67. If you were born before 1960, your FRA is either 66 or 66 and a few months. You can also wait until beyond your FRA to claim benefits, and by doing so you'll receive a bonus amount on top of your full benefit amount. If your FRA is age 67, you'll receive a 24% bonus by waiting until age 70 to claim.
If you've already started claiming benefits but your situation has changed, you might want a do-over. Perhaps you claimed at 62 because you lost your job and needed the money, but now you've found a new job and would like to wait until age 70 to claim in order to earn those bigger checks. Or maybe you simply didn't know how the age at which you claim affects your benefits, and you claimed early not realizing your benefits would be reduced.
Fortunately, it is possible to undo your decision after you've already started claiming benefits. However, there are a few caveats to keep in mind.
How to reverse your Social Security decision
You have 12 months from when you first started claiming benefits to change your mind. If you want to do so, you are eligible to reverse your decision, but you'll need to repay all the benefits you've already received. That includes not only your own benefits, but also any money your spouse or children have received from Social Security based on your application. If you claimed early because you needed the money, this part of reversing your decision might be tricky -- especially if you've already received several thousand dollars in benefits.
Also, keep in mind that if you're enrolled in Medicare already, you don't have to give up your Medicare coverage just because you reverse your decision to claim Social Security. If you choose to keep your healthcare coverage, you'll just need to pay your premiums directly rather than have them automatically taken from your Social Security checks.
If you've missed the 12-month window from when you started claiming benefits, you won't be able to undo your decision and withdraw your application. However, there is another option: suspending your benefits.
To suspend your Social Security benefits, you'll need to have reached your FRA. At that age you can essentially put your benefits on hold up to age 70, earning slightly bigger checks for each month you delay benefits. You'll earn approximately 8% more money for each year you wait, and you can start claiming again at age 70 or earlier. Although the checks you receive by suspending your benefits won't be as large as they would have been if you'd waited to claim in the first place, it is a good way to earn bigger checks if you can't reverse your claiming decision.
When is it a good idea to reverse your decision?
Just because you can undo your decision to claim benefits doesn't always mean you should, and there are some cases when it's best to claim sooner rather than later.
For example, if you have health issues or another reason to believe you won't spend several decades in retirement, you might actually receive more in benefits over a lifetime if you claim early. Although the checks are smaller when you claim early, you'll receive more of them -- and several years' worth of benefits add up.
On the other hand, if everyone in your family has lived into their 90s and you're in peak physical condition, those bigger checks you'll receive by waiting to claim could make a major difference decades down the road, when your personal savings may have dried up. If that's the case, it could be worthwhile to hold off on claiming for as long as you can to earn the most money possible.
The best time to claim benefits depends on your unique situation. If you claimed early but now regret your choice, it may be possible to reverse your decision. Regardless of what you decide to do with your benefits, it's important to understand all your options to make sure you're making the best decision.