An early filing will generally result in a lower monthly payout for life, but you may be able to avoid this.
Retirement plans: Why do Americans intend to accept Social Security sooner and possibly leave retirement funds behind?
If you raced to file for Social Security as soon as possible, you may be kicking yourself now when you realize how small your monthly payment is. But don’t get too worked up just yet. Even after you’ve filed, there is a method to increase your monthly benefit. You must act soon.
When you get a second chance
One little-known Social Security provision is that filers have one do-over option in their lifetime to withdraw an application for benefits and reapply later. This option may be useful if you have collected your benefits too soon and regret the decrease that occurred.
However, there are a handful of related restrictions to be aware of. To begin, you must withdraw your claim for benefits within a year in order to officially annul your Social Security file. Second, in order to file again with a clean slate, you must reimburse all Social Security payments received. That may not be a simple process.
However, if you wish to take advantage of your one-time lifetime do-over, you can use your retirement funds to refund your Social Security payments if they have already been spent. This may result in some financial losses, depending on your assets and the market. However, you will also provide yourself with what may be a higher Social Security income stream for the rest of your life. Because your monthly payments are assured, raiding your funds or locking in losses on investments may be more than worthwhile.
Try to make an informed selection from the outset
Although it is possible to reverse a Social Security application after receiving benefits, it is preferable to join up at the appropriate age from the start. So, before submitting your application, consider the following:
- Do I require my benefits immediately?
- Do I know how much money I’ll get each month if I file right now?
- Have I discussed my Social Security application with my spouse or partner?
- Have I evaluated my funds to determine my reliance on Social Security in retirement?
Running through all of these questions may prevent you from ever having to use Social Security’s do-over option. That’s not always a terrible thing.
