What if you retire, start collecting Social Security retirement, and then your plans change with a return to work? Using the following question, this is today’s topic.
Q: I started Social Security retirement at age 62, received benefits for over a year, then returned to work with high enough earnings to stop my SSA benefits due to the annual earnings test. I am ready to stop working again and restart my retirement. Will my Social Security amount be higher now because I am older? I am age 65 with a full retirement age of 66.
A: You have two issues here. One will eventually result in a higher retirement amount and the other might do so. Your monthly amount was reduced when you began Social Security retirement at age 62 because you were younger than full retirement age (FRA). While retirement amounts increase with cost-of-living adjustments and other changes, just getting older is not cause for increase and does not increase benefits already started. Considering just age, your retirement benefits will initially resume as they were when you first started them.
However, when a person electing reduced benefits reaches full retirement age (FRA), Social Security automatically reviews their record to see if there are months for which they had a reduction but did not actually receive a payment. If so, you get credit for those months, thus increasing your amount. This fits your situation since you had months without benefit payment due to your return to work. This automatic review takes place when you reach FRA. Effective then, benefits will increase by the number of months that your return to work prevented payment.
A related issue is that new earnings can potentially increase benefits. Social Security retirement is computed using your best 35 earnings years. If new earnings are higher than a previous year used, they could increase your retirement amount. Also automatic, this earnings review takes place each year and can increase benefits whether you are younger or older than full retirement age.
See Social Security publication “How Work Affects Your Benefits” for more information.
When retirement plans change, sometimes a person can withdraw his or her Social Security application and then re-apply at a future date. Doing this requires repayment of all benefits received by you and any family members through the application. However, if you change your mind 12 months or more after becoming entitled to retirement benefits, you cannot withdraw your application. Withdrawing the retirement application was not an option for this person because he or she had already received Social Security for over a year before returning to work.
Did You Know? Recorded in April 2013, a 28-minute webinar titled How Social Security Can Help You Plan for Retirement is now on the SSA website. Topics include your retirement amount, full retirement age, family benefits, retirement considerations and more. To watch, go to www.socialsecurity.gov and then to the new Social Media Hub at lower right.