You can file for Social Security as early as 62 years old. But according to the Social Security Administration (SSA), your benefits will be reduced because they were claimed when you were below the full retirement age (FRA). The FRA is typically around age 67, but it depends on your birth year.
If you are one of those who have opted to collect benefits at 62 or any time before your FRA, and have developed second thoughts, you may be eligible for a do-over.
Changing Your Mind About Receiving Social Security Benefits
If you withdraw your benefits early, you may potentially lose money. For example, according to the SSA, if your FRA would have been $1,000 per month and you start receiving benefits at age 62, you would receive $700. That equals a 30 percent reduction in benefits compared to waiting until 67.
You may conclude that a suspension of benefits will allow you to earn additional retirement credits, which would build your benefit even further.
Or you may decide that the drop in benefits from early retirement isn’t worth accessing them before your FRA. This is especially true if you have other sources of income.
Another reason could be that if you have a windfall, for instance from an inheritance, you may suddenly not need the additional income from Social Security benefits. Or you may have secured a higher-paying job.
Regardless of the reason, you do have an option.
When You Can Withdraw Your Application
Timing is important if you want to withdraw your application. According to the SSA, you must make the request within 12 months of your original application.
You can only withdraw your original application once.
Consequences of Withdrawal
You will be treated as if you never applied, if you choose to withdraw your application within the 12-month window. However, every dollar you have received must be repaid to the SSA. This is a full gross amount, even if you only netted a smaller amount due to deductions.
This means all your monthly retirement payments must be returned.
It also affects your family. All benefits paid to your spouse or children will need to be paid back. According to Thrivent, your family will need to consent in writing to the application for withdrawal if they have received benefits.
According to the SSA, money that never hit your bank account because it was withheld, such as for Medicare Part B, C, and D or any garnishments, will also need to be paid back.
According to Legal Clarity, you are not told the number upfront. When you send the request form SSA-521, the SSA will then send you a demand letter with the exact amount owed. There’s no interest or penalty charged on the repayment. However, if you fail to pay by the deadline in the demand letter, the debt becomes delinquent. At that point, a penalty is assessed, and interest kicks in after 90 days of non-payment.
Repayment must be completed before the withdrawal is finalized.
If you include Medicare on the withdrawal, the SSA erases the entire period of entitlement for both monthly benefits and Medicare.
If Medicare Part A covered hospital or medical expenses during this entitlement period, you must repay those costs.
After the SSA Approves Your Request to Withdraw
The SSA will review your application. If they approve the request, they will send you an official notice. At that point, you have a 60-day window from the date the approval letter was mailed to change your mind and cancel the request.
After 60 days, the withdrawal is permanent and can’t be reversed. However, you can reapply for benefits at any time in the future.
Voluntary Suspension of Social Security Benefits
Suspension of benefits is different than stopping benefits by withdrawing an application.
Voluntary suspension is available after you reach FRA. This is when, according to the SSA, you can pause or suspend your benefit payments.
By suspending your payments, you’ll increase future payments by up to eight percent per year, plus inflation. You can restart your payments whenever you want, but they will automatically restart when you turn 70.
However, family members collecting on your record will also have their benefits paused during the suspension.
If you are on Medicare, you will need to pay your own premium, as it will no longer be deducted from your Social Security payment.
Choosing to End Social Security Benefits
There are two ways to end Social Security benefits. One is to withdraw the application within 12 months of applying, and the other is to suspend benefits after you reach your FRA.
Before withdrawing your application, consider the ramifications, including repaying the benefits.
Suspending benefits may add to future payments but will temporarily end benefits to family members until you resume them or turn 70.
Either scenario has benefits and consequences.
