The Little-Known Social Security Do-Over Option Could Get Retirees a Bigger Benefit

The best age to claim Social Security depends on personal circumstances. That said, several studies have shown that most retirees with normal life expectancies will maximize lifetime spending power by claiming benefits at age 70.

However, very few people actually wait that long. In any given year, about nine in 10 newly awarded retirees start Social Security before age 70, and more than two in 10 start Social Security as soon as possible (age 62), meaning they get the biggest possible benefit reduction. Some people inevitably come to regret their decision.

Fortunately, there are two possible solutions, but very few people know about them. For instance, a recent survey from Nationwide Retirement Institute found that just 29% of adults were aware that claiming decisions can be undone within 12 months.

Read on to learn how claiming age affects benefits, and to see how Social Security's do-over and suspension options can help some retirees get a bigger benefit.

A U.S. Treasury check laying atop a fan of $100 bills.

Image source: Getty Images.

Claiming age has a big impact on Social Security benefits

Social Security benefits are based on earnings and claiming age. Specifically, a formula is applied to inflation-adjusted earnings from the 35 highest-paid years of a worker's career to calculate that person's primary insurance amount (PIA), the benefit he or she would receive at full retirement age.

The PIA is then adjusted for early or delayed retirement. Workers who claim Social Security before full retirement age receive a smaller benefit equal to less than 100% of their PIA. But workers who claim Social Security after full retirement age receive a bigger benefit equal to more than 100% of their PIA.

There are two qualification to those rules. Eligibility for retirement benefits begins at age 62, so no one can claim any earlier. And delayed retirement credits stop accumulating at age 70, so it never makes sense to claim any later.

The following chart links birth year to full retirement age, and it shows the retired-worker benefit (as a percentage of PIA) individuals in each group would get if they claimed Social Security at ages 62 and 70. In other words, it shows the smallest possible benefit and the biggest possible benefit for each group.

Birth Year

Full Retirement Age

Benefit at Age 62

Benefit at Age 70

1943-1954

66

75%

132%

1955

66 and 2 months

74.2%

130.6%

1956

66 and 4 months

73.3%

129.3%

1957

66 and 6 months

72.5%

128%

1958

66 and 8 months

71.7%

126.6%

1959

66 and 10 months

70.8%

125.3%

1960 and later

67

70%

124%

Data source: The Social Security Administration. Percentages have been rounded to the nearest one-tenth of a percent.

The age at which a person claims Social Security has a significant impact on the payout. Retirees born in 1960 or later will receive only 70% of their PIA at age 62, but they will receive 124% of their PIA at age 70. The difference as measured in dollars can be quite substantial.

For instance, the average PIA was about $1,984 for newly awarded retired workers in 2022. If we assume a retiree born in 1962 has an average PIA, their benefit would be $1,389 per month if they claimed Social Security this year at age 62. But their benefit would be $2,460 per month if they delayed Social Security until age 70. The difference is $1,071 per month, or $12,852 per year.

Naturally, some retired workers who start Social Security before age 70 come to regret the decision. But there are two possible solutions. Some retirees can undo their claiming decision, and other retirees can temporarily suspend their Social Security benefit.

The Social Security do-over option

In some cases, retired workers can cancel or withdraw their Social Security benefits application by completing a Form SSA-521. Specifically, claiming decisions can be undone only once, and only within 12 months of approval. Retired workers who cancel or withdraw their application must also repay every cent they've received from Social Security. That includes spousal benefits claimed on their work record and money withheld for Medicare premiums.

The do-over option completely erases the decision to start Social Security, allowing retirees to avoid benefit reductions for claiming early and earn delayed retirement credits. As discussed, that can dramatically increase the payout. In percentage terms, a retired worker born in 1960 or later would increase his or her benefit by 77% if delaying Social Security until age 70 rather than claiming at 62.

The Social Security suspension option

Unfortunately, retirees cannot undo their claiming decision if more than 12 months have passed since their application was approved. However, they can still temporarily suspend benefits to earn delayed retirement credits, provided they have reached full retirement age. Doing so increases their benefit by two-thirds of 1% per month, or 8% per year.

As a caveat, suspending Social Security does not reset the clock. That means any reductions for claiming early will still apply when payments are reinstated. Spousal benefits claimed on the retiree's work record will also be suspended.

Retirees can contact the Social Security Administration by phone or mail to suspend their payments, and they can follow the same process to restart benefits when they're ready. Retirees can also wait until age 70, and the Social Security Administration will automatically reinstate their payments.

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