Did you file for Social Security too early? Or maybe you want to accumulate Delayed Retirement Credits again so that you have a larger Social Security benefit in the future. Well, I have good news for you; if you’re between 66 and 70, you can increase your Social Security by suspending your benefits.
It’s instructive to know why you might want to consider suspending your benefits. First of all, know that you are not alone; filing for Social Security too early is a common mistake most people make.
Suspending your benefits once you reach Full Retirement Age, can help you undo some of this damage and you can begin to start accruing Delayed Retirement Credits again at the rate of 8% per year.
So let’s say you claimed at 62 and started to receive $1,500 per month at that point. If you suspend when you reach your Full Retirement Age of 66, and then resume your benefits at 70, your benefit will be approximately $1,980 per month (or 32% more) at 70.
Remember though, don’t wait beyond 70 to resume your benefits because there’s no point as Delayed Retirement Credits stop accumulating at 70.
And of course, you must take into account your current financial situation, since you won’t be collecting ANY Social Security benefit while it’s suspended.
Suspending is also helpful if you come into an unexpected financial windfall… perhaps from an inheritance from a parent as an example. Or, maybe you are one of the unlikely lottery winners. If you happen to have won Powerball yesterday, this may be a great Social Security strategy for you.
But seriously, if you suddenly don’t need your Social Security benefits at the moment, consider suspending them so that you can at least get that 8% per year return. Remember, this is not just an extra 8% between age 66 and 70, but rather, once you reach 70, this extra 8% per year will last for as long as you’re receiving the benefit!
Just keep in mind that if you do decide to suspend, benefits for your dependents such as a spouse or child will also be suspended as well (unless you suspend prior to April 29th, 2016; in this case, benefits for dependents can continue to be received).
How Do I Actually Suspend?
There are 4 ways to go about suspending your benefits. You can:
- Suspend your benefits in your original application online
- You can call Social Security at 1-800-772-1213 and make the request orally over the phone
- You can visit a local Social Security office in-person
- You can mail Form 795 to your local Social Security office.
If you decide to handle this by calling or in-person, you may want to say something like, “I would like to suspend receiving my Social Security benefits and I will resume them at a later time.”
Mailing in Form 795 is often the fastest way to get this done and what’s more is that you have a written record of your request as opposed to doing this verbally over the phone or in-person.
On Form 795 which is available the Social Security Administration website, just state: “I would like to suspend receiving my Social Security benefits. I will resume receiving them at a later time.”
The wording “at a later time” is specifically used here so that you have flexibility as to when you resume your benefits. You don’t have to wait until you are 70.
Is Suspending Right for You?
Well, as with all things Social Security, that depends on your specific and unique circumstances. You should speak to a Social Security advisor to determine whether this may be beneficial for you. They can help you crunch the numbers and a Social Security advisor can even do the filing for you.
As always, making the optimal Social Security claiming decision and maximizing your benefits is a complicated process. That is why we, at Social Security Advisors work with our clients to come up with the right strategies for their specific and unique circumstances.
Until Next Time,
Matthew Allen is Co-Founder/CEO of Social Security Advisors. As a serial entrepreneur who is driven by a passion for providing industry-leading advice to his clients, Matthew has been at the forefront of financial services for over a decade. Matthew brings insightful product vision, finance, and leadership skills to Social Security Advisors. In addition to co-founding Social Security Advisors, Matthew also founded The Universal Group of Companies, a private investment firm, in 2004. From 2000 to 2004, Matthew was a NYSE Market Maker with LaBranche & Co., a Fortune 500 New York Stock Exchange firm.