Q & A
If I elect to “file and suspend,” must by benefits be re-paid?
Full Question: I will be 66 at the end of this month. I will receive my first Social Security check in January. I’m single, never married. When I went to Social Security to sign up, I asked if I could suspend my payment in the next year. I was told that I could but that I would have to pay back all payments that I have received. This is never mentioned in your articles.
Also, I was hired by the Veterans’ Affairs Department one month before Medicare and Social Security were deducted, so I paid for Medicare but not Social Security for those years. Luckily, I also worked in Social Security-covered employment part time so I have some credit. These are my lowest years of earnings, however. They would be among the highest if Social Security had not been deducted.
I will not get a Federal pension for this work since I’ve withdrawn my contributions. Is it possible for me to pay into Social Security what would have been paid if Social Security taxes had been deducted on my VA pay that was not covered by Social Security?
Answer: Let me focus first on your first question. I think the person at the Social Security Administration gave you the wrong answer.
You asked to suspend your benefit, not withdraw it. The person at the Social Security Administration must have thought you were asking to withdraw it or didn’t understand that you have the option to suspend it. If you go back to that person and he or she doesn’t agree that you can suspend (not withdraw) your benefit once you reach full retirement age, ask to speak to his or her supervisor.
After you reach full retirement age, you can suspend your benefit and start it up again at a higher value any time up through age 70. But the increment to your benefit, which is the result of the delayed retirement credit, will be applied to the benefit level that you were receiving at the time of suspension. So, for example, had you started taking your retirement benefit at age 62 (and not lost any benefits between 62 and now due to the earnings test), your age-62 benefit would have been reduced by 30 percent compared to your full retirement benefit. That means any delayed retirement credits from suspending your retirement benefit would be applied to your reduced, not to your full retirement benefit. Read more…
Source: Laurence Kotlikoff, Forbes Contributor - 11/7/2014
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