The Social Security 'Do-Over' You May Not Know About — and How It Can Reverse a Bad Claiming Decision
You can claim Social Security when you turn 62. A layoff, health scare or cash crunch may push you to file as soon as you can.
But tapping your benefits ASAP results in a lower monthly benefit than if you wait. If you start receiving benefits then change your mind, there is a little-known rule that lets you reset your Social Security benefits instead of being stuck with smaller monthly checks.
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What the Social Security do-over is
The do-over stems from Form SSA-521,the Request for Withdrawal Application, which lets you withdraw a Social Security benefits claim after approval. It treats the original claim as if it never happened, but there are two key conditions.
First, you can only submit Form SSA-521 within one year of receiving benefits. Second, you must pay back all of the Social Security benefits you have received within that year.
You can only do this one time. Resetting benefits means that when you claim them in the future, you will have higher payouts.
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Paying the money back
The money you have to pay back isn’t exclusively tied to Social Security benefits. It also includes benefits paid to family members on their record any amounts withheld for Medicare premiums, taxes or garnishments, according to Social Security Administration's guidance.
The repayment requirement can be a major hurdle, and why this option isn’t realistic for everyone. Any auxiliary benefits your spouse or child received based on the claim must also be repaid. While it can still be worthwhile for people who regret taking out Social Security too early, you have to run the numbers to ensure paying it all back makes financial sense.
Who should consider it, and who shouldn't
Capitalizing on a Social Security do-over can make sense for people who realized the mistake early and are still working or returning to work. These individuals may have tapped into new income streams that can cover expenses or received poor advice when taking out Social Security early.
It’s more difficult to take back your claim if you have received Social Security benefits for several months and rely on them to break even. These individuals may not be able to repay the necessary amount.
If you missed the one-year window, you still have options. Social Security lets people voluntarily suspend their benefits after full retirement age until 70, which can give your future benefits a boost.