Made an unfortunate Social Security claim? Treat yourself to a financial Mulligan

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Mulligan is a term often used in golf, which basically means a “catch”. A player is entitled to a second chance on a hit, although this may not count on the scorecard. Sometimes life gives us the same opportunity to redo, and luckily a Social Security mistake is one of those opportunities.

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Taking a “mulligan” on a social security claim or claim usually means withdrawing from certain benefits. This could be because you decided to do it too early or want to suspend your benefits for a number of reasons. The most common reason people tend to withdraw from their allowance that has already started is simply because they wanted to work a little longer.

How to withdraw from benefits

The most important feature of this option that people may need to consider is that you will eventually have to repay the benefits. It is important to note that a social security reclassification can only be done in the first 12 months after taking your first benefit, so time is essential. It is equally important to remember that you can only do this once in your life.

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Withdrawing Social Security benefits means future payments will stop, and although no interest is charged, you will have to repay everything you received. This option essentially makes your Social Security account “whole” again, as you pay back everything you received and can then start over at some point in the future or before full retirement age.

Withdrawing benefits is very serious as it could result in a huge bill that you might not be prepared for. The amount you will have to repay will be due in one go. This means that if you received $ 20,000, you will have to pay this amount in one invoice and will have to pay it in full. The Social Security Administration (SSA) points out that you will also have to repay ALL the benefits you received, that is, everything your spouse or children received, as well as health insurance premiums and expenses. voluntary withholding taxes.

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Those who fully withdraw from benefits may have accepted early distributions and then changed their minds, or have a financial need to return to work to earn more money than their benefits. Either way, this should not be taken lightly and knowing the potential financial burden that could result is crucial.

You can start the withdrawal process here.

Suspension of benefits

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

When you suspend your benefits, you earn what are called “deferred retirement credits” for each month that you suspend your benefits. This will result in a higher benefit payment for you.

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You must have reached full retirement age to suspend benefits, which means if you took early retirement benefits at 62, but your FRA is 66, you will need to continue to receive benefits. benefits up to the age of 66.

One of the advantages of this strategy is that you will not need to repay any benefits you have already received. It might sound strange given the limit on withdrawal options, but the limitations are also different. You can opt out before full retirement age, but you cannot suspend before full retirement age.

You can start the suspension process here.

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Since Social Security benefit payments are different for everyone and depend on a number of factors, it is important to log into the SSA website and enter your own personal information to see the options that are right for you. the best. You might be in a good financial position and can withdraw benefits entirely to resume at a later date, without worrying about the lump sum bill you might incur as a result – or you may simply want to suspend your current benefit due to your death. ‘a spouse to maximize the amount you will receive later.

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Last updated: September 21, 2021

This article originally appeared on GOBankingRates.com: Have you made an unfortunate Social Security claim? Treat yourself to a financial Mulligan

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