Made a Regrettable Social Security Claim? Give Yourself a Financial Mulligan

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Mulligan is a term often used in golf, which essentially means a “do-over.” A player is allowed a second chance on a stroke, although it might not count on the scorecard. Sometimes life affords us the same opportunity for a redo, and thankfully, a mistake regarding Social Security is one such opportunity.

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Taking a “mulligan” on a Social Security claim or application most often means to withdraw yourself from receiving certain benefits. This can be because you decided to do so too early or want to suspend your benefit for any number of reasons. The most common reason people tend to withdraw from their benefit that has already started is simply because they wanted to work a while longer.

How To Withdrawal From Benefit

Perhaps the most important feature of this option people will need to take into consideration is that eventually, you will have to pay the benefit back. It’s important to note that a social security do-over can only be done within the first 12 months of taking your first benefit, so time is of the essence. It’s just as important to remember that you can only do this once in your lifetime.

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Withdrawing from Social Security benefits means that future payments will stop, and while there is no interest charged, you will need to pay back whatever you’ve received. This option essentially makes your Social Security account “whole” again, as you pay back whatever you received and can then start again at some point in the future on or before full retirement age.

Withdrawing from benefits is very serious, as it could cause a huge bill all at once that you might not be prepared for. The amount you have to pay back will be due in one lump sum. This means if you received $20,000, you will be on the hook for that amount in one bill and need to pay it off in full. The Social Security Administration (SSA) stresses that you will also have to pay back ALL benefits you received — meaning anything your spouse or children received, as well as Medicare premiums and voluntary tax withholdings.

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Those who withdraw from benefits entirely might have taken on early distributions and then changed their minds, or have a financial need to go back to work to make more money than their benefits supply. Either way, it is not to be taken lightly, and it is crucial to know the potential financial burden that could come as a result.

You can start the withdrawing process here.

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Suspending Benefits

This option is only allowed for those who have reached full retirement age but are not yet 70 years old. Age 70 is the minimum distribution age.

When you suspend benefits, you will earn something called “delayed retirement credits” for each month you suspend your benefits. This will end up in a higher benefit payment for you.

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You have to be at full retirement age in order to suspend benefits, meaning that if you took early retirement benefits at the age of 62, but your FRA is 66, then you would still have to take benefits until the age of 66.

One benefit to this strategy is that you will not need to pay back any benefit you have already received. This might seem strange considering the limit on withdrawal options, but the limitations are also different. You can withdraw before full retirement age, but you cannot suspend before full retirement age.

You can start the suspending process here.

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Since Social Security benefit payments are different for everyone and dependent on a number of factors, it’s important to log on to the SSA website and input your own personal information to see the options that are best for you. You might be in an advantageous financial position and can withdraw from benefits entirely to restart them at a later date, and not mind the lump sum bill you might incur as a result — or you may simply want to suspend your current benefit due to the death of a spouse in order to maximize the amount you receive later on.

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Last updated: September 21, 2021

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 
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