What Happens If You Claim Social Security Early and Then Change Your Mind? Options and Consequences Explained.

A record number of Americans are filing for Social Security benefits before reaching full retirement age (FRA), despite knowing their benefits will be reduced by as much as 30%. So what do you do if you file for early benefits, start receiving them, and change your mind?

According to the Social Security Administration (SSA), there may be a solution.

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How it's done

If it's been less than 12 months since you were first entitled to benefits, you may be able to withdraw your Social Security claim if you change your mind. Here's what to do:

• You must complete Form SSA-521, Request for Withdrawal of Application, and either mail it or bring it to your Social Security office.
• If you've received payments, you'll need to repay them, along with any money that was withheld for taxes, Medicare premiums, or garnishment.
• If payments were made to your spouse or children due to your Social Security claim, that money will also need to be repaid. Like payments to you, you'll need to repay any money withheld for taxes, Medicare premiums, or garnishment.

Following benefit withdrawal

Once you withdraw your Social Security claim, it will be as though you never filed it in the first place. Your benefits will continue to grow by 8% a year until you reach age 70, and you can refile for benefits at any time.

Suspending your benefits

If you've reached FRA (67 for most non-retired Americans) but haven't reached the age of 70 yet, you also have the option of suspending your benefits. If you choose to suspend benefits, you'll earn delayed retirement credits for each month they're suspended (until you hit 70). That means your benefits will increase by 8% each year.

Let's say your monthly benefits were $2,000 before suspending them and you decide not to resume payments until age 70. Given that your retirement credits continue to grow by 8% annually, your benefit will be 24% higher once you resume claiming them. Instead of receiving $2,000 a month, you'll receive $2,480.

Whether you decide to go back to work, start your own business, or simply forgo the $2,000 payments for a few years, that extra $480 a month amounts to $5,760 a year.

If you decide to suspend benefits, you're not required to repay any previous payments, although it does affect a spouse or child claiming on your record. It also suspends Supplemental Security Income payments.

In the event you suspend benefits and find yourself short on money, you can restart them. The new payout amount will depend on how long the payments were suspended.

Here's the bottom line: If you claim Social Security benefits and realize claiming early doesn't work with your long-term retirement plan, you do have options.

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