Q & A
I filed for Social Security 3 years ago, but now I don’t need it. Is there anything I can do?
Complete Question: I filed for my Social Security benefit at age 64 and now I’m 67. Obviously I had my benefit reduced and now, like many people, I had to get a job to supplement my income. To my surprise, I got a good paying job. The down-side is that I really don’t “need” my Social Security payments now and wish I could get the delayed retirement credits. Plus, I’m getting hit with tax consequences because of the additional income. Do I have any options?
Answer: Yes, you do have an option, which is called “voluntary suspension”. As long as you are over full retirement age, which you are, you have the option of voluntarily suspending your benefits. What will happen is your benefits will stop until you request a reinstatement. From the time you stop them until the time you reinstate them, you will earn delayed retirement credits. Since you are 67, you can earn as much as a 24% increase. One thing you need to know, however, is that if you are married, only one of you can choose to voluntarily suspend benefits at a time.
So let’s say you decide you want to voluntarily suspend your benefits – now what?
First, you have to make the request for the suspension – this can be done orally or in writing. The suspension will begin the month after the month when the request is made. This is because you are paid your benefit the month after it is due. For example, today it is March 13th. If you request the suspension today, you will receive your March benefit in April. Then your April benefit will be suspended and you will not receive any payments in May.
Second, do not forget about Medicare. If your Part B premium is deducted from your Social Security check, you will start getting a bill in the mail. If you have private insurance for Part D or Part C (Medicare Advantage) that also deducts premiums from your Social Security benefits, you will need to contact them and make other payment arrangements before the suspension begins.
Finally, if you reach age 70 and have not yet reinstated your benefits, they will automatically be reinstated in the month of your 70th birthday. If you choose to reinstate them sooner, you can request this orally or in writing.
So if you choose to voluntarily suspend your benefits, it will help you avoid the tax consequences you mentioned. You will, however, still come across these tax consequences after the age of 70 if you are still working and/or have other income sources.