The 2 Game – Changing Rules for Social Security Checks – What Most Retirees Don’t Know

Recent news highlights that two little-known rules can significantly affect Social Security checks, yet most beneficiaries are unaware of them. Given that 59% of retirees consider their monthly Social Security check an essential income source, optimizing these benefits is crucial for the majority.

However, making the most of the program isn’t always straightforward. Despite the best advice to delay claiming benefits for higher lifetime income, less than 10% of new claims in 2022 were made by those aged 70 or older. Most retirees begin claiming benefits at 62, the earliest eligibility age.

Rules

In some situations, claiming Social Security benefits as early as 62 may be wise. For example, those with health conditions that reduce life expectancy or those needing additional money for basic needs might benefit from early claims. However, for most people, delaying benefits yields better outcomes. Fortunately, even if you’ve already claimed early, two guidelines can help maximize your retirement benefits.

Application Withdrawal

If you start receiving Social Security benefits early but later realize you no longer need the income, you can withdraw your application within 12 months of approval. This option essentially resets your benefit timeline, allowing your future monthly benefits to increase for each month you delay past 62. However, there are catches.

First, you must repay all money received from Social Security, including taxes and Medicare premiums, which might be challenging for those with limited funds. You have an additional 60 days to revoke the withdrawal if approved but find repayment unmanageable. Note that you can only withdraw your Social Security claim once in your lifetime.

Repayment

According to the SSA, you can’t use this program for short-term borrowing. If you reapply before reaching full retirement age, your election remains unchanged. But if you miss the withdrawal deadline, can’t repay the received funds, or have already withdrawn a claim before, you’re not out of options. Another rule can still help enhance your monthly benefit.

Benefit

Once you reach your full retirement age (FRA), typically between 66 and 67 depending on your birth year, you can suspend your benefits. For those born between 1943 and 1954, the FRA is 66, and it gradually increases to 67 for those born in 1960 or later. When you suspend benefits, your monthly checks stop, but your future payments increase slightly. For each month of suspension, your benefit increases by 2/3 of a percentage point until you turn 70.

Potential Increase

This suspension can lead to a 24% increase in benefits for someone who suspends from 67 to 70. If you haven’t resumed receiving benefits by age 70, they will automatically restart.

Considerations

However, beneficiaries should consider a few catches before suspending benefits. If your spouse or child receives benefits based on your record, their benefits will stop, potentially reducing your household income. Also, Medicare Part B premiums, usually deducted from Social Security checks, will require direct payment. Without a monthly check, you’ll need to pay these premiums, starting at $174.70 per month, directly. If you can manage these adjustments, suspending benefits until full retirement age can be a smart strategy to increase your Social Security income.

Maximizing Benefits

Making the most of your Social Security benefits requires careful planning and awareness of all available options. Whether considering an early claim, withdrawing an application, or suspending benefits, knowing the rules and potential implications can help you make informed decisions that optimize your retirement income.

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