A third of older Americans rely on Social Security as their primary source of income, according to the Social Security Administration. So the extra 8% you receive per year by holding off on taking your benefit between the ages of 62 and 70 can have a big impact.
In fact, if you claim at age 70, you can bring home as much as 76% more per month than if you claimed at age 62.
But more than two-thirds of people claim Social Security before age 65, which locks them into a lower benefit.
A recent study by United Income reports that 96% of households are taking Social Security before the size of their monthly benefit — which increases by about 8% each year — maxes out at age 70. Their haste costs them, on average, 9% monthly or $111,000 per household in total.
What’s more, many people regret missing out: According to The 2019 MassMutual Social Security Pulse Check, 38% of people wish they’d filed later, and 30% were compelled to claim because of unforeseen circumstances, like losing a job.
If you started taking benefits before you really wanted to, there is a little-known way to undo the damage — if you qualify.
Form SSA-521, or a Request for Withdrawal of Application, is a “do-over” opportunity that allows someone who filed for Social Security benefits in the past 12 months to erase their withdrawal altogether.
However, there’s a catch. Besides the one-year window, you also have to return all of the benefits previously paid out.
That means if you’ve collected Social Security benefits for 10 months, applied for withdrawal of application and were approved, you owe every cent that was given to you in those 10 months.
This could still be a good option for some people who meet the conditions and want extra money they stand to make for every year before age 70 they hold off on taking benefits.