This Lesser-Known Social Security Rule Is Helpful but Hard to Take Advantage Of

Some Social Security rules are more well-known than others. You’re probably aware that you can sign up for benefits starting at age 62. You may also be aware that you can’t claim your complete monthly benefit without a reduction until you reach full retirement age, which is 67 for anyone born in 1960 or later.

Another fairly well-known Social Security rule is that delaying your claim past full retirement age results in boosted benefits. Specifically, your benefits rise 8% per year you delay, up until age 70.

But some of Social Security’s rules are less obvious and clear. And there’s one rule you may find very helpful as an early claimant. However, you should also know that this rule is very hard to benefit from, even if you happen to know about it.

Are you familiar with Social Security’s do-over rule?

You might assume that once you claim Social Security, you can’t go back and undo your decision. But actually, that’s not true.

All Social Security claimants are allowed one do-over in their lifetime. And that do-over could come in handy if you’re someone who claimed benefits early and now regrets that decision due to shrunken monthly paychecks.

To use the do-over option, you have to do two things:

• Withdraw your application for benefits within 12 months of filing for Social Security
• Repay all of the money in Social Security you received once your application was approved

It’s the latter requirement that tends to be difficult to meet, though.

It’s one thing to stop getting Social Security each month after a period of time. It’s another thing to have to repay money you may have already spent.

A lot of people who claim Social Security ahead of full retirement age due so because they’ve retired and need the cash. If you claim benefits at 62 but regret it nine months later, you may have limited options for exercising the do-over option if you can’t come up with nine months’ worth of benefits to give back.

And while undoing your claim could be a helpful thing for your finances, if you’re forced to rack up debt in order to be able to repay the Social Security Administration, that’s not a good thing at all. It could end up being a mistake you regret more than signing up early for Social Security in the first place.

Make sure you know the ins and outs of Social Security

While Social Security’s do-over provision is designed to give beneficiaries more flexibility, ultimately, its reach is limited — namely, because it really only applies to people who are sitting on a pile of money to repay. But if the rule were perhaps more well-known, more people could understand it and plan to use it as needed.

To this end, if you’re in the midst of your retirement planning, take the time to read up on Social Security so you can set yourself up to maximize your benefits. And that means reading up on the rules most people don’t know about. The more information you gather ahead of retirement, the more empowered you’ll be to make smart claiming choices.

It’s an equally good idea to keep reading up on Social Security even once you’re retired and receiving benefits. You never know when an updated rule might apply to you.