The Social Security ‘Pause Button’ Some Retirees Can Use

It’s not uncommon for individuals to start claiming Social Security benefits before reaching the age of 70. However, some may find themselves in a position where they no longer need these benefits due to improved financial circumstances. In such cases, pausing Social Security payments can be a strategic move to secure higher benefits later on.

What exactly is the Social Security ‘pause button’? When you reach full retirement age, which is typically 67 for those born in 1960 or later, Social Security offers you the option to pause your retirement benefits. This differs from withholding benefits due to early claiming or withdrawing your application within the first 12 months for a do-over. By choosing to pause your benefits, you won’t receive government checks during this period. Instead, delayed retirement credits will accrue in your account up to age 70, resulting in higher benefits for the remainder of your life.

The decision to pause Social Security benefits can lead to a significant increase in the amount you receive each month. For every year that you delay benefits past full retirement age, your benefit increases by 8% per year plus the rate of inflation. This can translate into a substantial sum of extra money in the long run. However, it’s essential to consider whether you have the financial stability to manage without Social Security income until age 70.

This strategy is particularly beneficial for individuals in good health with multiple income sources to cover living expenses. By waiting to claim Social Security, you can secure a larger monthly benefit in retirement without disrupting your current lifestyle. Additionally, a higher benefit can also have a positive impact on your spouse, as the survivor benefit is based on the higher earner’s benefit amount.

One key consideration to keep in mind is that pausing Social Security benefits means navigating living expenses without government checks for a period of time. This adjustment can be challenging for those who have relied on these payments for an extended period. It’s also important to note that family members receiving benefits on your record may not continue to receive payments during the suspension, although divorced spouses may have different rules.

When you eventually resume benefits, you won’t receive a lump sum payment. Instead, you’ll enjoy higher monthly benefits for the rest of your life. Before making any decisions, it’s crucial to assess your financial situation, health, and other relevant factors. Consider the impact on Medicare coverage, family benefits, and consult with the Social Security Administration before suspending payments.

In conclusion, pausing Social Security benefits can be a strategic move to secure higher monthly payments in retirement. By weighing the potential benefits against the challenges of managing without government checks, individuals can make an informed decision that aligns with their long-term financial goals.