Are you getting the most out of your social security benefits? If not, don’t worry. You’re not alone. Many people make mistakes when it comes to their social security benefits. This guide will discuss some of the most common social security mistakes and how to fix them. Don’t let your hard-earned money go to waste! Read on for more information. Starting Social Security prematurely is common. Here are three ways to fix Social Security mistakes to get back on track.
How To Fix Social Security
Repay Social Security Benefits
If you change your mind within the first 12 months of electing benefits, you can still file a Form SSA-521 to withdraw the application and pay back any benefits.
If a spouse or children received benefits, those benefits would also need to be repaid.
Once benefits have been repaid, you are treated as though you were never elected. This means you will not receive an actuarial reduction due to the original filing and can file a restricted application for spousal benefits.
The restricted application is available only to claimants born before Jan. 2, 1954.
Go Back To Work
If you are outside the 12-month window and decide to return to work between 62 and your full retirement age (FRA), your benefits will be subject to an earnings test.
The 2020 earnings test exempt amount is $18,240 ($48,600 in the year you turn in your FRA).
Social Security will withhold $1 in benefits for every $2 of earnings above that amount.
This is not a tax.
- Let’s say you elected benefits at 62 and received a $1,800 monthly benefit (75% of $2,400), and now you want to go back to work at 63, earning $100,000 per year.
- $100,000 minus $18,240 is $81,760.
- Divide that by two, and the earning penalty would be $40,880.
- Because that is greater than the total Social Security benefit of $21,600, you would not receive any Social Security for this period.
We want to be clear that the “earnings penalty” is not a tax because Social Security would adjust the reduction on your benefits for each month in which you didn’t receive a check due to the earnings test.
If you received benefits for the 12 months, you were 62 but then worked and did not receive any further benefits until age 66. The Social Security Administration would return to your record and adjust your benefit upward.
They will treat it as if you had initially been elected at 65 instead of 62, so you would then begin receiving a check for $2,240 plus any cost of living adjustments accrued.
Suspend Social Security Benefits
There is another option for those who don’t want to return to work.
Once you reach your FRA, you can voluntarily suspend benefits.
You need to call or visit a Social Security office and request a voluntary suspension.
You can even call in advance of your FRA with instructions to suspend at the FRA.
If requesting a suspension, you will be suspending benefits for anyone receiving a benefit from your record.
By electing at age 62, you reduced your monthly benefit to 75% of what you would have received if elected at the FRA.
By suspending benefits at age 66, you will increase your monthly benefit by 8% per year until age 70, for a total of 32%.
If you increase 75% by 32%, you get 99% (.75 x 1.32 = .99).
In other words, you can take Social Security from 62 to 66, suspend benefits from 66 to 70, and still get 99% of the benefit you would have received if you waited until the FRA.
This should not be viewed as a claiming strategy, only as a means of minimizing the damage of a mistake.
There are two reasons one wouldn’t want to elect at 62 with the intent of suspending at the FRA:
- If you die between 62 and the FRA, your widow would be permanently stuck with a substantially reduced benefit
- You would forfeit any future option of claiming a restricted spousal benefit
- Once you file for your benefit, even if it’s in suspension, your spousal benefit is reduced as if you were receiving it.
If your suspended benefit is higher than your spousal benefit, you will not receive a spousal benefit.
Maximize Social Security Benefits For Your Spouse Who Has Not Started Their Benefits
If your spouse has not yet elected to take their SSI, delaying their benefits may offset the mistakes you’ve already made.
Request A Quote
Get help from a licensed financial professional. This service is free of charge.
Frequently Asked Questions
What if you make a mistake on your social security application?
If you make a mistake on your Social Security application, you can contact the Social Security Administration (SSA) and request to have it corrected. In most cases, this can be done by submitting an updated application with the correct information. If there was an error in processing your initial application, the SSA might be able to correct it on their end without requiring any additional documentation from you.
What if social security makes a mistake?
If the Social Security Administration (SSA) makes a mistake, you may be able to have it corrected by submitting an appeal. Depending on the nature of the error, you may need to provide additional documentation for the SSA to consider. If the mistake resulted from inaccurate information provided by you, however, no corrections can be made, and you will have to wait for your benefits to begin.
Related Reading: Social Security Savvy