As long as you are past the full retirement age (FRA), but below the age of seventy (70) years, you have the right to request and receive a suspension of your Social Security retirement benefits. This gives you an opportunity to earn some delayed retirement credits which are beneficial in increasing the amount of monthly benefits payable to you when they are reinstated. These credits are quite valuable for one’s lifetime Social Security earnings as they give approximately 8% for each year of delay after the primary insurance age. For example, if the primary insurance age for a person is 67 years, and the person decides to delay claiming benefits until 70 years old, the benefits of that person could increase by as much as 24%.
In order to stop receiving benefits, one is required to make a formal application to the Social Security Administration. Suspension will become effective in the month after the request is approved. Benefit payments will not be made while the suspension is in force, or to any other person entitled to benefits based on the same record with the exception of divorced spouses. This means that all spousal or dependent benefits based on your record will also be held during this time.
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Planning around benefits is crucial
Except in the case that you have already requested reinstatement, if you have not requested reinstatement, your benefits will resume in the month prior to your 70th birthday. or you can decide to have them resume earlier on your request to the SSA, and the benefits will start the month after your request. on the other hand, it is worth mentioning that there will be no increases for benefits that are initiated after 70 years of age as the age limit for earning extra delayed retirement credits surpasses this age.
This method may be more beneficial for such people who will be relying on Social Security income for many years to come. If the benefits are postponed, one is assured of a more substantial monthly payment for the rest of their years which is one of the most useful aspects of retirement planning especially for the people who expect to go beyond the average life span. The advantage here is more pronounced when the issue of inflation is taken into account since adjusting for inflation will benefit the higher adjusted benefit amount.
Nevertheless, as in any other strategy that allows stopping benefits, such opportunity should be weighed against its potential risks. For instance, in the event that one postpones taking benefits, there is a requirement to apply for Medicare at the age of 65 so as to avoid incurring late enrollment penalties. Not addressing health care costs as part of your plan may mean that the gains from waiting to take benefits may be wiped out. Moreover, when we talk about suspension, one should also consider regarding Social Security benefits which are often received by dependent family members and how such an action will lead to poverty in the household.
Rule changes to be considered
The procedures concerning the suspension of benefits have been made better with the recent changes in the rules. Prior to 2016, a person was able to suspend their benefits and then resume them after a certain period of time where as currently, such suspensions are only applicable for benefits not taken from that period going forward. This also enhances the measure by avoiding any reinstate of a benefit which is not clearly understood while at the same time protecting against any sudden and unwelcome occurrences regarding the reinstatement of the benefits.
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Because it is possible to suspend benefits under Social Security voluntarily, an increase in retirement funds has presented itself. However, this decision ought to be guided by such factors as the individual’s financial requirements, health status, and even life span. Speaking to an expert such as a financial advisor or the SSA may in turn help in figuring out if that option is appropriate for one’s retirement plan. Responsible foresight helps you to ensure that you get the best possible use of Social Security benefits and yet still avoid financial constraint in your old age.
