Restarting your Social Security Benefits

Pay Back Your Social Security and Restart It to Increase Your Monthly Payments

Many people begin receiving their Social Security Benefits at age 62, the earliest possible start point for such benefits. Doing so allows you to acquire more of your benefits earlier, and can be a beneficial option if you believe you have a short life expectancy, or if you need the money from Social Security immediately.

However, as we explore in our article on Deferring Social Security Benefits, there can be great advantages -- more money over your lifetime -- to not taking your benefits until age 66 or beyond, particularly if you plan to live a longer period of time, or have a spouse whose benefits can likewise be increased through deferment.

But what if you’ve already begun receiving Social Security Benefits? Are you required to continue receiving them in the amount you initially did? The answer is no.

The Social Security Administration allows seniors who have begun taking their benefits early to repay the full amount that they have received in benefits so as to "restart" their benefits at a higher rate of income, as though they had deferred taking their benefits in the first place.

How Does it Work?

Social Security form 521, “Request for Withdrawal of Application”, allows a beneficiary to terminate their Social Security benefits at their current rate and repay the full amount they have thus far received. They will then begin to receive benefits as though they had deferred their social security benefits up until that point.

The benefits of doing this can be quite large. If you began receiving Social Security at age 62, and restart your benefits at age 70 (the effective maximum age to start social security), you can increase the total amount you receive per month by as much as 70%.

Depending on how much in benefits you have to pay back, you can therefore rapidly wind up ahead of where you would otherwise be, especially since you don’t have to pay any interest on the money you return to the SSA. Many financial service professionals suggest thinking of this option like investing in a high-return annuity, where you are paying a lump sum (the total amount of benefits you have thus far received) in exchange for a lifetime monthly payment (the larger benefits check you receive every month from then on).

You should note that if you do choose to restart your Social Security payments, there will be a period where you will have to pay Medicare directly until your Social Security benefits begin again.

Check with your local Social Security office for details on how best to go about this prior to beginning the process.

What are the Downsides?

It is very important to evaluate your circumstances carefully when considering whether or not to restart your Social Security benefits. You must pay back the total gross amount (the benefits you have received plus taxes) to date in a lump sum, which can deplete your retirement savings if you are not careful. If you paid any income tax on the amount you received, you can refile your 1040s for those years.

If you believe that you will need to pay for a large expense soon, such as medical costs, then you may be better off leaving your Social Security benefits the way they are and saving your money for that expense. Moreover, while you will be receiving a larger amount every month, it’s important to calculate carefully how much more the amount will be (Our Social Security Calculator can help you do that). If the amount you stand to receive is not much more than what you are getting now, then it may not be worth doing.

In addition, you need to consider your general health or life expectancy when deciding whether or not to restart your benefits. If your life expectancy is fairly short, then you may not live long enough to take advantage of the increased benefits or make back the amount you paid to the Social Security Administration. As a general rule, if you are considerably higher than age 70 (the point at which deferring your Social Security no longer has a benefit), then you should not consider this option, nor should you if you waited to begin your Social Security until age 68-70 or so. But if you are currently 70, started your benefits at age 62, and have the money available to pay back the benefits you’ve so far received, then restarting your social security can provide a very large gain for your retirement security.