How to Protect Your Retirement Income from Social Security Mistakes

Suspending your Social Security benefits as a way of boosting your retirement income can make sense in certain situations. But some readers who tried to follow this strategy say they have encountered problems from an unexpected source—Social Security representatives who either don’t understand how suspending benefits works or actually claim it can’t be done.

People who begin taking benefits between age 62 and their full retirement age (FRA)—66 for those born in 1943, rising to 67 for those born in 1960 or later—have the option of suspending benefits at their FRA. They can resume them at any time until benefits reach their peak at age 70. For those who defer Social Security benefits until age 70, your benefit will be 76% higher than if taken at 62, the earliest age that most people can begin claiming retirement benefits. Still, most people decide to take Social Security early because they need the money or cannot continue to work for medical reasons.

Even so, circumstances may change. Maybe a private pension kicks in, reducing the need for Social Security. Or your kids move out on their own, reducing household expenditures and the need for current income. Or maybe you simply want to walk back your decision to claim early, given the higher income you might receive by delaying—a survey last summer sponsored by Nationwide Financial found that nearly 40% of those who filed early for Social Security later regretted their move and wished they had waited. If so, suspending your benefits can be a smart strategy.

If you want to pursue this option, however, your first step is to become well informed—especially given the possibility you’ll encounter opposing views from Social Security representatives. That's the problem one reader wrote me about:

“The agent at our Social Security office said he didn't know anything about this and that I could check online at socialsecurity.gov and if I found out any additional information on this I could contact him and he would advise me someone I could call and get more information on this. I was shocked that he (a paid official Social Security agent) told me if I found out any additional information on this to come back to the office.”

As I told her, all the agent had to do was check his own web site to become informed. That doesn’t sound like too much to ask, does it?

While this agent did not know about suspending benefits, at least he didn’t provide the wrong information. Here’s an agent who did, according to another reader:

“We both are retired. I am 71 years old. My wife is 67 years old. I started taking Social Security benefits at 66 (my FRA) and my wife started taking early (reduced) benefits at 62 on her own income. We went to the Social Security Administration office today to sign up to stop my wife's benefits for the next three years and start taking benefits at the age of 70. The SSA office says that we can do that but you have to pay back the total (large) amount that she received from the day she started taking benefits at 62. Without paying that large amount, they said, we cannot do that. We showed them the copy of your article and requested them to review it. We also requested that we would like the office supervisor also to review our case and your article. After reviewing your article, the SSA office supervisor told us that information in your article is incorrect.”

Now, I admit that being infallible is above my pay grade. But the right of this woman to suspend her benefits is not in question. And she doesn’t need to repay Social Security one penny of her earlier benefits. I urged the couple to do some homework and go back to their SSA office and try again:

Your wife can SUSPEND her benefit at any time between her FRA (age 66 in her case) and age 70. She does not have to repay anything that she had received in the past. But she will have to make sure she pays for any future Medicare premiums that had been deducted from her Social Security. The only time that repayment of prior benefits is required is if she WITHDREW her benefits entirely. However, this is only permitted within 12 months of when she began taking benefits, and this is not the case with her. Often, people get confused about whether they're talking about SUSPENDING or WITHDRAWING benefits.

Here are the official descriptions of the suspension rules from the Social Security Program Operating Manual System (POMS):

GN 0249.100: Voluntary Suspensions

GN 0249.110: Conditions for Voluntary Suspension

Everyone makes mistakes, and Social Security’s rules are very complicated. Further, the Social Security Administration has been hammered by budget cuts, forced to reduce staff, and close many offices around the country, as a Senate report last summer documented. That’s still no excuse for providing people with wrong or misleading information. But it further reinforces the need for people to learn the agency’s basic rules so they can look out for themselves.

Social Security, by the way, agrees. “If the situations you described are indeed accurate, they are unacceptable and we apologize for providing any misinformation,” agency spokeswoman Dorothy Clark said. “While our programs are complex, the vast majority of our employees provide accurate information. However, when we learn of these situations, we take action to correct the errors and provide further employee training.”

Philip Moeller is an expert on retirement, aging, and health. His book, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” will be published in February by Simon & Schuster. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

More on Social Security:

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How Social Security will cut your benefits if you retire early

This little-known Social Security strategy can boost your retirement income