Two Social Security Rules Help Seniors Maximize Benefits

Seniors can withdraw their Social Security application within 12 months of approval to increase monthly benefits. Alternatively, they can suspend benefits at full retirement age to earn delayed retirement credits, boosting benefits up to 24%.

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Aqsa Younas Rana
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Two Social Security Rules Help Seniors Maximize Benefits

Two Social Security Rules Help Seniors Maximize Benefits

Social Security is a crucial part of many Americans' retirement plans, with 59% of retirees relying on their monthly benefits as a major source of income. While delaying benefits until age 70 or older can maximize lifetime income, less than 10% of new Social Security claims go to people in this age group.

Why this matters: With millions of Americans relying on Social Security benefits for their retirement, understanding these little-known rules can have a significant impact on their financial security and quality of life. By taking advantage of these rules, seniors can increase their monthly benefits, reducing the risk of poverty and financial strain in their golden years.

The first rule allows seniors to withdraw their Social Security application within 12 months of approval. This will increase their monthly benefit for every month they wait to claim, dating back to when they turned 62. However, they must repay all money received from Social Security, including Medicare premiums and taxes withheld. They can cancel the withdrawal within 60 days if unable to pay back the owed amount. Importantly, this withdrawal can only be done once per lifetime.

The second rule applies to those who have passed the 12-month withdrawal deadline or are unable to repay the owed amount. Upon reaching full retirement age, which is between 66 and 67 depending on birth year, seniors can suspend their benefits to earn delayed retirement credits. The Social Security Administration will add 2/3 of a percentage point to their future checks for each month benefits remain suspended, up to age 70. This can result in a benefit increase of up to 24%. However, anyone except an ex-spouse collecting on the senior's record will become ineligible for benefits during the suspension. The senior will also need to pay Medicare premiums out of pocket.

These two little-known Social Security rules provide valuable options for seniors to maximize their retirement benefits, even if they initially claimed early. By understanding the 12-month withdrawal option and the ability to suspend benefits at full retirement age, retirees can make informed decisions to secure a more comfortable financial future. With 59% of seniors relying on Social Security as a major income source, taking advantage of these rules can make a significant difference in their retirement years.

Key Takeaways

  • 59% of retirees rely on Social Security as a major income source.
  • Delaying benefits until 70+ can maximize lifetime income.
  • Seniors can withdraw their Social Security application within 12 months.
  • Suspending benefits at full retirement age earns delayed credits.
  • These rules can increase monthly benefits by up to 24%.