Regret Claiming Social Security Early? These 3 Moves Could Help

Filing for Social Security at 62 is the most common claiming age, and for some people it works out fine. Others end up wishing they'd waited, especially after going back to work or running the numbers on what a delayed benefit would have looked like.

An early claim isn't always permanent, though. If the decision no longer fits the retirement plan you have in mind, a few options exist to undo or offset it and rebuild your benefit. Here are the three moves worth knowing.

Withdraw your application if it's been less than a year

If you filed within the past 12 months, you can ask Social Security to cancel your application by filing Form SSA-521. Once approved, the agency treats it as though you never claimed, freeing you to reapply later at a higher benefit.

The catch is that you have to repay every dollar you received, including any benefits paid to a spouse or dependent and anything withheld for taxes or Medicare premiums.

Other rules include:

• You must act within 12 months of your first payment
• Your spouse and any dependents must consent in writing
• You are only allowed one withdrawal in your lifetime

If you want to keep Medicare after withdrawing, you will pay those premiums out of pocket rather than having them deducted from a check. Since you are repaying benefits you already paid taxes on, it is also worth talking to a tax advisor about how that affects your return.

Suspend your benefit once you reach full retirement age

If the 12-month withdrawal window has closed, suspending your benefit at full retirement age can be a good next option. Between 66 and 67, depending on your birth year, you can pause your payments and earn delayed retirement credits of about 8% per year until age 70. Suspending from full retirement age to 70 raises your benefit by roughly 32%, and unlike a withdrawal, there is nothing to repay.

For example, someone collecting $1,600 a month at full retirement age who suspends until 70 would raise that check to about $2,112. The missed payments can often be made up later through the larger monthly amount.

A few things to know before suspending:

• Any spousal or child benefits being paid on your record will pause too
• A divorced ex-spouse can usually keep collecting during your suspension
• You'll keep paying your Medicare premiums directly during the suspension

That makes suspension a useful option for some people, though it works best when you can cover the gap in income for a few years.

Keep working to raise your benefit

Social Security calculates your benefit from your 35 highest-earning years, so if some of those years were low or empty, continued work at a higher salary can replace them and push your benefit up. The agency recalculates each year automatically, and if your latest earnings beat one of your old top-35 years, your check gets a permanent bump.

Take someone who reached 62 with 30 years of earnings around $50,000 and five years of no work from earlier in life.

If they keep working five more years at $80,000, those new years replace the empty ones, raising their monthly benefit by roughly $300, or about 16%. The more zero years on your record, the bigger the potential gain, since each new year of earnings replaces a zero rather than a lower number.

There is also a related benefit for people who claimed early and kept working. If your earnings were high enough to trigger the retirement earnings test before full retirement age, some of your benefits were withheld. Those withheld amounts are not lost.

Once you reach full retirement age, Social Security recalculates your benefit and credits you for the months that were held back, which raises your check going forward.

How to know which move fits

The right move mostly comes down to how recently you filed and where you are now. If it's been less than 12 months and you can afford to pay back what you've received, withdrawing your application is the cleanest reset, wiping the slate clean so you can reapply later at a higher benefit.

Once that window closes, reaching full retirement age makes suspending the next best route. You can stop collecting for a while, earn credits that raise your benefit, and restart at a higher amount with nothing to pay back.

Continued work helps no matter which path you choose, since it raises your benefit at any age and can run alongside the others. Someone who suspends can keep working and adding to their record at the same time, building the benefit from two directions at once.

Bottom line

Few financial mistakes in retirement give you this many ways to course-correct, so if you've been second-guessing an early claim, it's worth looking into sooner rather than later.

Running your numbers through ssa.gov or talking with a Social Security specialist before you act is the simplest way to know which option fits your situation. And for anything you'd need to repay, a tax advisor can help you sort through the paperwork.

The sooner you look into it, the more choices you'll have, and the better the odds of turning that early decision into a larger check for the rest of your life.