Do you have a client who how claimed Social Security benefits before having the chance to determine his or her optimal start age? US News “Planning to Retire” blog posted an article discussing slowing Social Security claims, after peaking in 2009 due to the baby boomer population being hit by the recession and delaying with job layoffs. The article discusses options for recipients who wish to increase their future Social Security benefits.
Social Security Claiming Slows
US News blog, Planning to Retire
By Emily Brandon
April 17, 2012
Turns out it could not be too late for the client to change a claim for benefits if it’s within the first year of signing up. “If you signed up for Social Security within the past 12 months, you can withdraw your application for retirement benefits, pay back all the money you have received without interest, and then restart Social Security payments at a later date. When you reclaim Social Security your payments will be bigger due to delayed claiming.”
If a client signed up to receive benefits more than a year ago, there is still an option available to help boost future benefits. “Retirees are also allowed to temporarily suspend future payments and restart them later, which can result in bigger checks that account for the time period in which payments were not received.”
The ability to pay back benefits and withdrawal your application for benefits and the option to suspend payments are little known rules about Social Security. Rules regarding paying back benefits to receive higher future benefits changed in December of 2010 (read the regulation modification). Before implementing the current rules recipients were able to pay back all benefits collected at age 70, regardless of when their claim started, allowing essentially an interest free loan for eight years if a recipient began to claim benefits at 62. Current rules allow for a single year grace period to payback claimed benefits, still without an interest penalty. The rules regarding suspending benefits were also changed in 2010. Previously, recipients could collect benefits, pay them back, and collect higher benefits in the future. Now you may only collect higher future benefits by suspending benefits, which means you do not collect any benefits during the suspension.
