There are some circumstances in which it makes sense to suspend Social Security benefits that are being received now in order to receive higher benefits in the future.
It could be the circumstance in which a Social Security benefit was activated early based upon incomplete or poor advice that needs to be reversed.
It could be a circumstance in which an individual did not think that they would be working before full retirement age but later took on employment that was subject to the earnings test that subsequently would reduce Social Security benefits.
Or it could be a circumstance in which additional assets or an unexpected income source would allow a beneficiary to suspend benefits now in order to create higher benefits when activated in the future.
Let’s first look at the two circumstances that allow an individual receiving Social Security benefits to suspend the receipt of payments and activate at a later date.
The first circumstance occurs when the individual is before their full retirement age and have not received more than 12 months of benefits. In a circumstance such as this, an individual may voluntarily suspend benefits, repay to the Social Security Administration all benefits received, and subsequently activate their benefit at a later age. This is a one time “do over”.
The second circumstance occurs for an individual who is at or past their full retirement age. They can voluntarily suspend payments and subsequently reactivate them at a later age if it is more appropriate for their circumstances and they would like to receive the increased payments that would be generated through the delay.
Based on current law, however, it is very important to understand that any benefit that is being received based upon the suspended benefit will also be suspended as well. If a spouse is receiving a spousal benefit based upon this individuals working record, the spousal benefit will be suspended as well. If child benefits are being received on the suspended worker’s working record, these child benefits would be suspended as well.
If you have any questions feel free to contact me
