April 21, 2014

Resetting (overturning) decision to claim early Social Security benefits

About half of SS beneficiaries elect to claim retirement benefits “early” (before their “full” retirement age), thus locking in a lower benefit for the rest of their lives. While some workers make this decision because they absolutely need the income, it can be a big mistake for beneficiaries (and/or their spouses) who live longer than average lifespans. “So what can a retiree do if she later regrets the decision to take early benefits or her circumstances change such that she no longer needs the early income? It turns out there is a way to mitigate this decision after the fact—a ‘reset’ allowed under the Social Security rules.” Joe Alfonso explains, “Social Security allows you, upon reaching full retirement age, to stop receiving benefits until sometime in the future. Under the program rules, delayed benefits after full retirement age are entitled to earn credits of 8% per year up to age 70. Beneficiaries whose full retirement age is 66 and who delay benefits until they reach age 70 can therefore receive delayed credits totaling up to 32%.” Read the details in the Christian Science Monitor: http://www.csmonitor.com/Business/Saving-Money/2014/0419/Deciding-when-to-take-Social-Security-benefits  Don’t forget that the real full retirement age is 70; anyone who claims benefits before that age accepts a lower monthly benefit for life. Read the 10/23/13 blog post for details.

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