Question: I claimed Social Security six months ago at 62, but I now realize that my checks are too small. What are my options?
Answer: Social Security might end up becoming a very essential source of retirement income for you. And that’s why it’s important to choose your filing age carefully.
In 2022, Social Security was the only source of income for 27% of adult recipients, reports Pew Research, citing data from the Census Bureau’s Survey of Income and Program Participation. And if you expect those benefits to constitute a large portion of your retirement income, then you may not want to claim them at the earliest possible age of 62. That’s because filing before your full retirement age results in a permanent reduction in those monthly payments.
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In 2023, 26% of men and 27% of women claimed Social Security at 62, according to the Center for Retirement Research at Boston College. And while filing at 62 may work out just fine for some people, you may be feeling regretful if you made a similar choice six months ago and realize you’re struggling in the wake of a smaller monthly check.
All isn’t lost in this situation, though. You may still have options for boosting your Social Security checks despite having filed for benefits early.
You could undo your claim — but it’s not so easy
Because Social Security has a lot of rules to keep track of, you may not realize that all claimants are eligible for a single do-over in their lifetime.
As Aaron Brask, financial planner at Aaron Brask Capital, explains, “If you are within the 12-month window of the first claim, you can elect to repay the benefits and effectively pretend you never claimed.”
Once you withdraw your application and repay that money, you can file again at a later point in time to lock in larger monthly checks.
However, if you claimed Social Security six months ago and have been living on that money since, you may not have many options for paying those benefits back unless you have savings to tap. If so, Brask says, “It is often better to delay benefits and use money from one’s liquid savings to bridge the gap until Social Security benefits start.”
In other words, if you can dip into your portfolio to refund the Social Security Administration the six months of benefits you were paid, you may come out ahead financially in the long run.
Pausing benefits is also an option
If you’re unable to repay the six months of benefits you received from Social Security so far, another option, says Brask, is to suspend your benefits until later on.
“You can also press the pause button on Social Security benefits once you reach full retirement age,” he explains. “Suspending allows you to earn delayed retirement credits up until age 70 that can boost your Social Security benefits by 8% per year.”
Thomas J. Brock, CFA and CPA at Annuity.org does warn, “This maneuver will not undo the smaller checks you locked in by initially claiming Social Security at 62.”
However, Brock says, “It can meaningfully increase your monthly benefit and provide more robust payments over the long term.”
How to avoid claiming Social Security early in the first place
There are several factors that might lead to an early Social Security claim — unexpected job loss, burnout at work, or the fear that Social Security is running out of money and on the verge of disappearing completely (it’s not).
Even if you come into retirement with a nice amount of savings, that money can run out eventually. Social Security, on the other hand, guarantees you a monthly benefit for life. The higher it is from the start, the more long-term stability you might enjoy as a retiree.
One of the easiest ways to avoid an early Social Security claim is to continue working until full retirement age arrives. If that’s not possible, Brock says, other options may include working part-time, cutting back on expenses, or tapping savings vehicles.
If you’re forced to retire at 62 but don’t want Social Security right away, one expense to look at cutting could be housing. Downsizing could not only lower your recurring housing costs but also potentially leave you with a pile of cash to cover your expenses until full retirement age arrives.
Brask recommends waiting on Social Security unless you have a major health issue that’s expected to shorten your lifespan substantially.
“Delaying Social Security benefits typically works out well for people with near or above-average longevity expectations,” he explains.
Brask is a fan of tapping savings to delay starting Social Security. And there are benefits to doing so beyond locking in larger monthly checks.
“Spending money from one’s portfolio until they start Social Security can reduce taxes,” he says. “In particular, they may find themselves in lower tax brackets before Social Security starts. This means they might pay little or no tax when they withdraw from their portfolios.”
