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Ask Rusty - Changed my mind after claiming Social Security

September 23, 2018

Dear Rusty: I will be 67 years old this September and have been receiving my Social Security benefits since September of last year (2017). I’ve found that I do not need the money now, and since I don’t need the money, I’m wondering if can I repay what I’ve already collected and just wait until I’m 70 to get a larger benefit? Signed: Changed My Mind

Dear Changed: Situations such as yours are exactly why Social Security has a “do over” option, which allows those who claim benefits to withdraw that application within one year. Reality is that sometimes financial circumstances change.

People who lost their job may react by claiming Social Security, and then later find other employment, which provides them the income they need. Or they may simply just change their mind and be sorry they applied for benefits.

In any case, the do-over option can be used to fix that but exercising that option does have some important consequences.

The short answer to your questions is “Yes” — you can exercise the “do over” option and totally withdraw from Social Security if you do so within 1 year of the date your benefits originally started.

But — and this is a big but — you will have to pay back everything that you have collected, including any withheld taxes, Medicare premiums, and any spousal or other dependent benefits that may have been paid on, to or from your account over the past year.

Obviously if you wish to do that you should act with haste to submit Form SSA-521 (Request for Withdrawal of Application), because you’re coming up on the one-year anniversary of your original application.

However, since you have already reached your full retirement age of 66, you have another less financially painful option available to you which you might want to consider - you can simply suspend your current benefits, which will allow you to earn delayed retirement credits equal to 2/3rds of 1 percent per month of suspension (8 percent per year) up until you reach 70 years of age.

You will have lost that initial 8 percent benefit growth you would have otherwise realized for the 1st year after you reached age 66, but that may be less traumatic than repaying Social Security a very large lump sum for an entire year’s worth of benefits paid.

Then when you reinstate (un-suspend) your benefits at age 70, the benefit amount will be about 24 percent higher than it is now. Thus, you’ll gain a significantly increased benefit without needing to repay all that money you collected for a whole year.

Russell Gloor is a certified Social Security Advisor with the Association of Mature American Citizens.

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