Determining when to begin claiming Social Security is one of the most important retirement decisions you'll make, as it will affect your monthly income for the rest of your life.
Age 62 is the earliest you can file, and it's also the most popular choice -- with roughly 35% of men and nearly 40% of women filing at this age, according to a 2020 survey from the Bipartisan Policy Center.
However, claiming early will also dramatically reduce your monthly payments going forward, and those reductions are permanent. Fortunately, if you file early and later regret your decision, you have a couple of options.
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1. Withdraw your application
If you filed for Social Security within the last 12 months, you have the option to withdraw your application and stop collecting benefits.
This essentially allows you to undo your decision, and after you successfully withdraw your application, you can file at a later date. The caveat, though, is that you will need to pay back all the benefits you've already received, along with any money that was withheld for Medicare premiums.
For many people, paying back thousands of dollars in benefits simply isn't possible. In that case, you have a second option.
2. Suspend your benefits
Once you reach your full retirement age (FRA) -- which is between ages 66 and 67, depending on the year you were born -- you can suspend your benefits up to age 70.
When you suspend your benefits, you're pressing pause on collecting payments. You won't need to pay back the money you've already received, but your benefits will stop until you decide to start claiming again.
After you refile later, you'll start collecting larger checks. Your payments won't be as large as if you'd delayed benefits from the beginning without claiming at all, but they'll be bigger than you were previously receiving.
It's important to keep in mind, though, that you can't suspend your benefits until you reach your FRA. So, for example, if you filed at age 62 but regret it by 64, you'll have to wait until at least age 66 or 67 to suspend your benefits.
The biggest reason to consider these options
There are several reasons why you might consider withdrawing your application or suspending benefits, but for many people, it comes down to finances.
When you file at age 62, your benefits will be permanently reduced by up to 30%. But by delaying claiming until age 70, you'll receive your full benefit amount plus up to 32% extra each month.
In some cases, the difference between claiming at 62 and 70 can amount to several hundred dollars per month or more. With soaring inflation and many retirees watching their savings dwindle as the stock market sinks, that extra money can go a long way.
Is reversing your decision worth it?
Whether delaying Social Security is the right move for you, though, will depend on your situation. If your primary goal is to increase your monthly income, withdrawing or suspending your benefits could be worth considering. Then you can delay Social Security and earn larger checks.
On the other hand, if you're already retired and depend on Social Security for a significant portion of income, consider whether you'll be able to live without benefits for a few years if you choose to reverse your decision. There's no right or wrong answer here, but these options won't be the right fit for everyone.
Claiming Social Security is a big move, but if you change your mind later, you're not out of luck. By understanding the implications of withdrawing your application or suspending benefits, it will be easier to decide whether these strategies are right for you.
