Paying into the Social Security system with every paycheck finances a monthly benefit at retirement. However, taking the benefits before you reach full retirement age -- 65 to 67, depending on the year of your birth -- means your benefit can be reduced by as much as 25 percent. If you apply for early benefits and then change your mind later about this important decision, you can restart the payments at a later date, when your entitlement is higher and any intervening payments to Social Security may also boost the benefit. The Social Security Administration allows you to do this, though some conditions apply.
One Time and 12-Month Rules
If you've taken early retirement, you can withdraw your original application for benefits and then reapply for Social Security later when the program will owe you more each month. You need to provide a reason for the withdrawal, and you can only withdraw and reapply once. Multiple stops and starts are not allowed. In addition, once you've taken benefits for 12 months, you may not withdraw the application, then start again at a later date for a higher benefit.
If you withdraw your application for benefits once they've started, you'll have to repay Social Security everything you've already been paid. This would include any benefits paid to your spouse or your dependents on your own Social Security record. If the SSA withheld money from the benefits to pay Medicare parts B, C, or D, or for federal income taxes, you must also repay these funds, even though you didn't receive them directly. In addition, anyone who has been receiving family benefits must give her permission in writing to the withdrawal.
Withdrawing the Application
To withdraw your application for benefits, you'll also need to fill out the SSA 521 form. It's a one-pager that asks for an explanation of your reason, which might be "I intend to continue working" or "Other." The 521 form states, "We intend for you to use this procedure only when your decision to file has resulted, or will result, in a disadvantage to you." Once you've mailed in the form, you can still cancel it within 60 days. Until the withdrawal is approved, you will continue to receive benefits. When you're again ready to take the benefits, you simply file another application, which can most easily be done online. If you withdraw your application but are on Medicare, then the SSA needs to know whether you intend to continue on that health insurance program, or would like to also suspend it. If you withdraw your application for Social Security benefits and stay on Medicare, you will be responsible for setting up another payment method for the premiums.
Reasons for the Do-Over
The withdrawal mulligan allowed in the Social Security rules allows you, in effect, to draw an interest-free loan out of your Social Security account. It works best if you have other sources of income and expect to have enough cash on hand to repay the agency when the bill comes due. The SSA can be quite adamant about collecting overpayments, so consider this option carefully. It's best to seek the advice of a professional financial adviser before mailing in your 521.