Q&A: The Risks of Taking Social Security Early

Is there any way to reverse a previous decision to receive early benefits?

I started receiving Social Security retirement benefits at age 62, even though I had not retired. As a result, my benefits have been significantly reduced. Is there any way to change my mind and stop receiving benefits?

Persons who begin receiving Social Security retirement benefits prior to the year in which they reach full retirement age will have their benefits reduced by $1 for every $2 of earned income in excess of a specified amount. For 2015, this annual amount increases to $15,720. Full retirement age (the age at which you are entitled to full retirement benefits) for persons born in 1943 through 1954 is 66 years.

Having your Social Security retirement benefits cut in half for income over $15,720 is a steep price to pay for electing these benefits at age 62, and some persons who make this election later regret it. Is there anything they can do about it? Can they revoke their election?

If you are receiving Social Security Retirement benefits and you change your mind about when they should start, you may be able to withdraw your Social Security claim and re-apply at a future date. However, if you change your mind 12 months or more after you became entitled to retirement benefits, you cannot withdraw your application. You are limited to one withdrawal per lifetime.

Before you make your decision, there are some things you need to know about what will happen if you withdraw your application:

• You must repay all the benefits you and your family received based on your retirement application. The repayment must include any:

  • Benefits your spouse or children received based on your application, whether or not they are living with you.
  • Money withheld from your checks, including:
    – Medicare Part B, Part C, and Part D premiums.
    – Voluntary tax withholding (VTW) of federal income taxes for all years, including the current year.
    – Garnishments.

• If you are already entitled to Medicare, you may also choose to withdraw your Medicare coverage, but you do not have to do this.

• If you are not entitled to Medicare, you will not automatically be enrolled when you turn 65. Be sure to contact Social Security about 3 months before you turn age 65 to check about applying for Medicare. Failure to apply for Medicare when you are 65 could result in a higher premium.

• If you are also entitled to veteran’s benefits, you should check with the Department of Veterans Affairs (VA) separately about how your withdrawal affects those benefits.

• To withdraw your application:

  • Fill out Social Security Form SSA-521 and include the reason why you want to withdraw the application on the form. If you already have Medicare, your request must also clearly state whether your Medicare coverage should or should not be included in the withdrawal. If you want to keep your benefits and just terminate your Medicare Part B coverage, you cannot use Form SSA-521.
  • Send the completed form to the Social Security Administration, which will notify you of the amount of benefits you need to repay. You have 60 days to cancel an approved withdrawal. After that, you will lose any possible entitlement for the period covered by your original application.

• If you cannot withdraw your retirement application and you have reached full retirement age, but are not yet age 70, you can ask the Social Security Administration to suspend benefit payments.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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