Ray started his Social Security benefit at age 62 thinking it was the right decision for his family. He turns Full Retirement Age in September of 2020. He started doing some projects from home that have generated additional income over the years, and he doesn’t need his Social Security income to maintain the quality of life he and his wife desire. Does he have any options?
What does this have to do with anything? We have always been told that once you filed it was a done deal. Basically, for most, it is a done deal. But at Full Retirement Age, you do have the option to Suspend (not withdraw) your Social Security benefit. It is called Voluntary Suspension and is as easy as a phone call or a written request to the Social Security Administration offices.
Any beneficiary who has reached FRA has the right to suspend retirement benefits after having filed for them and/or having received benefits. You are opting not to receive your benefits from that point forward, until you reinstate them or reach age seventy. This suspension would begin the month after you make the request. In the meantime, your retirement benefits would earn Delayed Retirement Credits worth 8% per year from the time you suspended up to age 70. You don’t have to wait until 70, you could reinstate at any time.
Sounds like a plan for those that can make ends meet without this additional income. But you need to consider how this may affect other family members and how you will pay your Medicare premiums. If you have a spouse, a minor child or a permanently disabled adult child that are receiving benefits from your work record, their benefits will be suspended as well. And you cannot receive spousal benefits off another record during this suspension. The only exception to this is a divorced spouse – they will continue to receive benefits on your earnings record even after you suspend benefits.
This is a good way to improve your Survivor Benefits (8% per year) because your Survivor Benefit is worth up to 100% of what a deceased worker was collecting or entitled to collect at the time of death.
If you have filed for benefits within the last 12 months, including those under Full Retirement Age, you can withdraw your application by filing Form 521 and reapply at a future date. However, you must repay all the benefits that you and your family members have received from this earnings record. There is a limit of one withdrawal per lifetime.
As with anything dealing with Social Security it become complicated very quickly. Make sure you need this income source before drawing. Ray could have earned a lot more money on his projects had he not been limited to the Earnings Limitations rule because he was drawing his benefit prior to Full Retirement Age. Seek out professional guidance before you make your decision, whether filing early or suspending.
Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!
