Do You Need a Mulligan on Your Social Security Election?


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Did you rush into electing your Social Security benefit? Did you feel like you had a good reason to take it, but now aren’t so sure? Or maybe you got good advice, made a good plan, and an unpredicted life change upended everything? If it’s been less than a year since you started receiving your Social Security benefit, you have options. You can ask for a do-over and restart your benefit later down the line.

Social Security Do Over

In the first 12 months after you elect your Social Security, you have a chance to ask for a do-over. Making this decision can make all the difference in increasing your money in retirement.

Social Security Basics Review

In some ways social security is very simple. You give the government some of your paycheck for your working career, and they provide you with a pension after you retire. You can choose from a range of dates, and the date you choose will determine how big your check will be each month. If you start your checks early, the check will be smaller because they expect you to receive more checks overall. If you start your checks late, they will be bigger.

Your benefits are calculated using your Full Retirement Age (FRA), which is based on the year you were born. For people born in the year 1956, their FRA is age 66 + 2 months. (Look up the age for you birth year here). You can elect your benefits as early as age 62, or as late as age 70. If you add up all the months in between these ages, there are 96 separate dates when you can start receiving benefits, each producing a slightly different benefit check amount! But let’s take a minute to remember:

  • You don’t have to elect your benefit at the same time you retire
  • You don’t have to elect your benefit at the same time you start Medicare
  • You don’t have to elect your benefit at the same time as your spouse

So when should you elect your benefit? That’s an answer that will be unique to each person who asks. Some people start from the position that you should elect your benefits on the last available date, so the check is as large as possible. Others say a bird in the hand is better than two in the bush, and think electing benefits at the earliest date should be best. For most people, the answer is somewhere in the middle.

Option to Withdraw

The Social Security administration generally expects you to start your benefit and stick with it, but they understand that everyone can make a mistake or need a second chance through no fault of their own. So they allow anyone to withdraw their application for benefits for up to one year (12 months) after starting them. Even within this 12-month window, you can only use the option once. Withdrawing the application means that any future payments will stop. It also means you have to pay back any payments you have received so far, as well as any payments for things deducted from your Social Security check like Part D premiums. There is no interest charged on these re-payments.

Listen to hear a discussion of when you might want to withdraw your social security benefits.

So, Should I Withdraw?

The withdrawal application form, excerpted below, is very straightforward. It asks for identifying information and a simple explanation of why you would like to roll back your benefits.

Click to see the form in full

The most common reason people ask for a Social Security do-over is because they went back to work. Another reason is a change in life circumstances such as divorce, death of a spouse, or possibly a windfall in the form of an unexpected inheritance. You could also want to change your mind if you rushed into electing Social Security benefits, signed up on a whim, or lacked good advice at the time.

Take the example of our clients Jane and Bob. Jane recently turned 65 and had earned a small Social Security benefit working part-time of about $388/month. Bob is five years younger, age 60, and won’t be eligible for Social Security until October of 2022. When Jane retired, she figured that her check was small, so she might as well go ahead and take it. As the primary earner, Bob also has a decision to make – should he delay, letting his benefit grow as big as possible? That may be smart for some people, but since Jane is older, she will be at her FRA when he is first eligible. So if Bob elects his benefit early, he will receive about $1950/month (less than his full benefit), and Jane would be eligible for half of his full benefit, about $1300/month. Jane has only received 3 months of benefits so far, so Hans will be advising her to take the Social Security do-over. Overall, they will receive more money than if Jane continued to receive her own check, even if Bob’s grew to its largest amount.

Social Security may or may not be the biggest piece of your retirement income, but it’s a choice you only make once…unless you make it twice! If you recently elected your benefit and did it without much thought or planning, now is the time to confirm whether you made the right decision. With a combination of some optimization math, an understanding of the options, and a feel for personal preferences, Cardinal can help you make the most of your benefit.

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