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Monday January 25, 2021

Savvy Living

Savvy Senior

Can I Stop Receiving Social Security if I Go Back to Work?

I lost my job last month because of the coronavirus crisis. With little savings, I have been thinking about starting my Social Security benefits early to help me get by. But my question is, if I find a new job can I stop my Social Security benefits and restart them at a later date so they can continue to grow?

Yes, there are two ways to potentially stop your Social Security retirement benefits, once you have started collecting them, and restart them at a later date, which would boost your benefits. In order to do this, certain rules and conditions must be met. Here are your options:

Withdraw your benefits: One way to pause your Social Security benefits is to withdraw your Social Security application. This must be done within 12 months of starting your benefits and you will have to repay what you have received so far. If you choose this option, Social Security will treat your application for early benefits as if it never happened.

To withdraw your benefits, you will need to complete Form SSA-521 (SSA.gov/forms/ssa-521.pdf) and send it to your local Social Security office. Also, be aware that you can only withdraw from benefits once in a lifetime.

Suspend your benefits: If you are not eligible for withdrawal, but have reached your full retirement age and have not yet reached age 70, another option is to voluntarily suspend your retirement benefits. With a suspension, you do not have to repay the benefits you have received. You can restart them anytime you wish, or they will automatically be reinstated at age 70. See SSA.gov/planners/retire/ageincrease.html to find your full retirement age.

By suspending your benefits, you will earn delayed retirement credits, which means your benefit amount increases for every month of the suspension. Your payment will go up by two-thirds of 1% monthly or 8% annually. A benefit of $1,500 monthly, for example, increases by $10 for each month you have benefits suspended.

You can request a suspension by calling the National Social Security Office at 800-772-1213 or in person at your local Social Security office.

Working and Collecting Benefits

If you start collecting Social Security and you go back to work, but your income is modest, you may want to continue drawing your benefits while working. If your earnings are higher, it may make sense to stop your benefits.

Social Security has a "retirement earnings test." If you are under your full retirement age and earn more than $18,240 in 2020, Social Security will deduct $1 from your benefits for every $2 you earn over that amount. For those who reach full retirement age in 2020, a less stringent rule applies. In this case, $1 will be deducted for every $3 you make above $48,600 until you reach the month of your birthday in the year you reach full retirement age.

It is also important to know that if you were to have reduced Social Security benefits because of the earning limits, they are not lost forever. When you reach full retirement age, your benefits will be recalculated to make up for what was withheld.

Also, if you do decide to work and collect Social Security benefits at the same time, you need to factor in tax implications. Because wages increase your income, it might make your Social Security benefits taxable.

If your combined income is between $25,000 and $34,000 as an individual filer or between $32,000 and $44,000 as joint filers, you will pay tax on up to 50% of your Social Security benefits. If you earn above the upper limit of these ranges, you will pay tax on up to 85% of your benefits. To help you calculate this see IRS Publication 915 at IRS.gov/pub/irs-pdf/p915.pdf.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

Published July 10, 2020
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