How A Social Security Do-Over Could Mean A 24% Boost For Your Checks

Social Security benefits might not be your only retirement money, but chances are it's a significant part of your retirement budget. While it can be complicated to navigate when to retire and even how to calculate your anticipated benefits amounts, it nonetheless can be crucial to time your retirement out based on the Social Security Administration's policies.

A major consideration that many retirees might not realize when deciding when exactly to retire is that Social Security benefits can technically be claimed starting at age 62. However, retiring early (that is, before the full retirement age of either 66 or 67) can lead to a significant reduction in your benefits amounts. In fact, applying for retirement benefits at 62 can leave you with 30% less in your monthly benefits payments than if you had waited until you were eligible for full retirement. This can, and has, left some people regretting their decision to retire early (we spoke with a CFP about reasons to reconsider doing so).

With that in mind, the good news is that there are options for those who might regret retiring early and want a do-over for their Social Security retirement claim. In fact, depending on the year you were born (which changes the age of full retirement, according to Social Security) you could increase your benefits check by 24% or even 28%. However, there are some important caveats to consider. Let's dive into the options available to you, and why they might not necessarily be what's best for your wallet.

If you decide you regret retiring early — or even if your circumstances change work- or lifestyle-wise — there are two primary options available to you, each with their own rules to be aware of. The first option requires you to change your mind about early retirement within the first year of your retirement. Social Security gives you the option of using a one-time do-over within the first 12 months of signing up for Social Security retirement benefits. However, in addition to the time constraint, this option requires you to pay back any benefits you received before you changed your mind. If you're able to pay back any benefits and file in time, Social Security will essentially treat you as if you never applied for retirement at all which can allow you to continue growing your benefits amount for when you do eventually retire.

The second option is for those who might not decide they want to undo their early retirement until after the one-year deadline for option one passes. In this second option, you must continue collecting your early retirement benefits until you hit full retirement age (again, 66 or 67, depending on the year you were born). Once you hit full retirement, you can then request to suspend your benefits. Keep in mind you can only suspend Social Security up to age 70, at which point benefits max out. This pause allows you to grow your benefits amount an additional 8% for every year you delay resuming your benefits payments. (Here are five reasons why people may take Social Security early, and reasons why they choose not to.

For those who might be considering taking the second option and suspending their Social Security benefits at full retirement age, it's important to run the math first. For instance, let us say you began collecting benefits at age 62 (early retirement), which cuts down your monthly benefits payment. The average Social Security benefits amount per month in January 2024 was $1,907. When we subtract the 30% early-retirement deduction, that leaves an average monthly payment of $1,334.90.

If you decide at age 67 (your full retirement age) to then suspend your benefits for the three years before turning 70 (when Social Security benefits max out), you will add 8% to your benefits amount every year. This would mean you end up with a monthly benefit amount of $1,681.59 once you hit 70 and resume your monthly payments. This is a monthly increase of around $347, not counting any cost-of-living adjustments that might also be tacked onto your monthly benefits amount.

However, if we total your original monthly payment of $1,334.90 for the three years you could've been receiving those monthly payments, you will be forgoing just over $48,000 from 36 monthly payments. The additional $347 a month you would receive for doing this would take years to reach that same amount of money. In this way, it might not necessarily be financially worth pursuing the three-year pause of your benefits at your full retirement age. (Read more about how a majority of Americans worry their retirement funds will run out.)