I've already started collecting Social Security retirement benefits. Is it too late to change course?

S.F. Ehrlich Associates |

You took the money and ran, didn't you?  When it comes to Social Security, most Americans do the same thing.  According to the Center for Retirement Research at Boston College1, as much as 90% of Social Security recipients collect at or before Full Retirement Age with a significant number of people collecting as early as 62.

So does Social Security allow a mulligan?  It does, albeit on a fairly limited basis.  Let's see if you're eligible.

First, are you over the age of 70?  If so, you can stop reading this article - take a break from reading financial advisor blogs and go treat yourself to a nice dinner with your recent Social Security check.

For those still reading, presumably, you're currently collecting and younger than 70.  The next question is how long have you been collecting?  If you've been collecting for more than 12 months, the only option you have is to suspend collection of your Social Security retirement benefits, provided you're older than Full Retirement Age.  Suspending your benefit allows you to collect whatever 8% annual increases remain between your current age and age 70, an obvious advantage if you have the capacity to delay.  When pursuing this strategy, keep in mind that any ancillary benefits being paid (e.g., to a spouse or minor child) based on your record will also be suspended.

What if you've been collecting for less than 12 months?  You can withdraw your Social Security application as though it was never filed and pay back any retirement benefits collected to date, interest-free.

The current "do-over" strategy offered by Social Security is not as generous as it used to be.  Once upon a time (pre-December 2010), Social Security was providing recipients the opportunity to take out what was essentially an interest-free 8-year loan from the Social Security administration.  For example, an individual could begin collecting Social Security benefits at age 62 and upon reaching age 70, withdraw his application, pay back all Social Security retirement benefits received to date - interest-free - and resume collection of his Social Security at the maximized level (click here for more on timing of collection of Social Security retirement benefits).  The Social Security Administration finally wised up to this loophole, narrowing the window for withdrawal from 8 years to 12 months.

While there isn't as much flexibility to reverse course when it comes to your Social Security collection strategy as there once was, all is not lost.  You still have some options available provided you understand how they fit into your specific situation.

1 Munnell, Alicia H., and Angi Chen. “Trends in Social Security Claiming.” Center for Retirement Research at Boston College, 31 May 2015.
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