I Filed for the “Early” Social Security Retirement Benefit – Am I Stuck With It?

Posted on Nov 22, 2016 By James Ezzell

James EzzellThe short answer is yes, no and maybe.

As I have discussed in my previous blog posts, our bankruptcy practice often syncs neatly with our Social Security disability practice. Another aspect I have touched on as well is Social Security retirement itself, what is it, what numbers and figures we are talking about and so on.

I often see individuals during the lengthy process between applying for and actually being awarded disability benefits reach the age where they can file for retirement benefits “early” while still waiting on the outcome of their appeal, just as eligible non-disabled individuals can.

While that may sound appealing for both, it is a double-edged sword. If an individual does take the “early” retirement option, they may be locked into that lesser monthly monetary figure forever, not being able to take advantage of the somewhat higher number available at their “regular” or full retirement age. So, in those cases, yes, you are stuck with it. This is an even bigger deal if SSA retirement is a person’s only source of retirement funds.

Sometimes, claimants just don’t have a choice to file “early” or wait it out, as it is their only option available to put food on the table or keep a roof over their head. Fortunately, all is not lost in some circumstances, according to The Motley Fool‘s Sean Williams.

Last week, Mr. Williams wrote an article on the subject I found very interesting and thought you might as well: In Four unconventional ways to boost your Social Security income. Not having practiced in the Social Security retirement area, several of these options were unfamiliar to me but might be potentially vital for some of our clients under the right circumstances.

For example, say you are wading through the disability appeals process with no end in sight, and have expended all your resources trying to keep up with your house and car payments. To keep your head above water, you apply for and receive “early” retirement benefits.

Then, shortly thereafter, you are magically awarded your Social Security disability benefits (there are a variety of ways this can happen without “warning,” a ruling on the record by an Administrative Law Judge, etc.) or receive some sort of other windfall that no longer makes it crucial that you continue to receive your “early” retirement.

So now, in retrospect, you realize that your decision to file “early” for retirement benefits is going to cost you a large amount of money over the long term. Surprisingly to me, the SSA does offer a limited solution to that problem. If twelve months haven’t passed from your application date, an individual can file Form SSA-521 Request for Withdrawal of Application which allows for exactly what it says. While your “regular” or full retirement age eligibility is restored, the rub is that you have to return all monetary benefits you have received “early” thus far. That could be tough, however, for most recipients living in financially strapped circumstances.

Another sort of do-over is the SSA’s ability to withhold some of your “early” retirement benefits if you are still working and making over a certain amount of money. I won’t go into the details here but, suffice it to say, these withheld “early” benefits don’t disappear but are actually added to your “early” retirement monthly benefit when you reach what was to be your projected “regular” or full retirement age, thus providing a nice little bump.

Another good point Mr. Williams makes in his article is the importance of where you retire, which could effectively help or hinder what you get each month, as under some circumstances both the Federal government and state governments will tax your retirement benefits. He points out that pro-active retirement planning is key here to minimize tax liability as some plans allow for lowering adjusted gross income, etc.

Finally, he touches on the availability of children’s / survivor’s benefits for certain individuals who meet the fairly stringent criteria. I also covered this topic to a degree in an earlier blog post. To wit, if a claimant’s children are unmarried, under the age of 18 (or older than 18 if disabled, 19 if a full-time student in high school) they can potentially receive up to half their parent’s benefit, apparently whether that person is living or deceased.