11 Oct Can I stop taking Social Security once I’ve started?

Q. I decided to take Social Security benefits at 62 because I needed the money. That was three years ago. Now I got an inheritance so I don’t really need the Social Security. I’ve heard that you can do a re-do if you pay back all the benefits you received. Can I really do this so later I can get a higher Social Security benefit?
— Unsure

A.  Deciding when to take Social Security benefits can be tough. If you take them earlier, you’ll receive smaller monthly payments than if you wait.

You made your decision because you needed the money back then, but as you show, life events like an inheritance can change your circumstances.

It sounds like the money you received gives you some financial flexibility.

Unfortunately, you can’t get a re-do on filing for Social Security, said Jeanne Kane, a financial planner with JFL Total Wealth Management in Boonton.

In your case, too much time has passed.

“Social Security gives you up to 12 months to change your mind after you become entitled to retirement benefits,” Kane said. “If you withdraw your claim within that window, then you would need to pay back any benefits you or your family received.”

This includes any Social Security related benefit and money withheld in your check for Medicare premiums for Parts B, C or D, she said.

But in your case, it’s been three years, so this isn’t an option.

You do have another possibility.

“You can suspend your current Social Security benefits and claim them at a future date,” she said. “To do this, you need to reach your full retirement age (FRA) first. For anyone born 1954 and later, this is between 66 and 67 years old.”

Kane said you were penalized by filing for Social Security benefits before your FRA. By claiming at 62, you received 25 percent less than you would have at your FRA.

By suspending your Social Security at your FRA, you get the chance to erase some of that penalty, she said. Your reduced benefit will have a chance to grow at 8 percent per year from your FRA until you turn 70.

She recommends you plan to claim your benefits when you reach 70. There is no additional benefit by filing after that date. At that point, you will have maxed out your benefit.

Also keep in mind that suspending your Social Security retirement benefit also suspends any other benefit you get on someone else’s record – such as a spouse – or any benefit that someone gets on your record, Kane said. So, if you suspend for one benefit, you suspend for all.

There is one exception. If you’re divorced, your ex won’t be affected if he or she claims on your benefits.

This impacts Medicare too.

“Normally, Medicare premiums are deducted from monthly Social Security payments. Medicare will now bill you for your Part B, C, and D premiums,” Kane said. “If you forget to pay your premiums, you may lose these coverages. It will be important to stay on top of paying these bills.”

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This story was originally published on Oct. 11.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.