How to Stop Social Security Benefits
Learn how to put the brakes on your monthly payout
If you already filed for Social Security retirement benefits, you may be able to pause benefits if you meet certain requirements relating to your benefit start date and your age. Understanding the rules allows you to stop Social Security benefits and restart them when desired to take control of your retirement finances.
When It Makes Sense to Stop Benefits
You may want to pause Social Security payments in these scenarios.
You have not yet reached your full retirement age (FRA). You are entitled to your full Social Security benefit amount at your FRA, which is based on your birth year. If, for example, you were born in 1957 and started benefits at 62, you would have received a lower benefit than at your FRA of 66 years and 6 months. If you start benefits too early, and later learn that you could have locked in a higher benefit, you may want to pause Social Security for a few years.
You want to take advantage of delayed retirement credits. If you delay your retirement until past your FRA but before you turn 70, you become eligible for delayed retirement credits, which incrementally boost your monthly payout. For example, if you were born in 1943 or after, you get an 8% annual increase in the principal insurance amount of your Social Security benefit, which results in a payout increase of two-thirds of 1% every month. So, you may want to stop Social Security payments and restart them after some years.
You start benefits while you work and earn too much. Suppose you started collecting Social Security before your FRA and later decide to head back to work. You may want to stop Social Security benefits if your earnings exceed the Social Security earnings limit, which would result in a reduction in your benefits. If, for example, you're under your FRA throughout 2020, $1 will get deducted from your benefits for every $2 you earn over $18,240. If you reach your FRA at any point during 2020, $1 gets taken out for every $3 you make above $48,600 until you reach your FRA.
You want to minimize taxes. If your combined income is between $25,000 and $34,000 as an individual or between $32,000 and $44,000 as joint filers, you would pay tax on up to 50% of your Social Security benefits. If you earn above the upper limit of these ranges, you would pay tax on up to 85% of your benefits. Pausing Social Security during a period of years when you know you will earn a high income can result in less taxable income in that period, which may allow you to convert traditional IRA assets to a Roth account or realize capital gains without taking a large tax hit.
When You Can Stop Social Security Benefits
The Social Security Administration provides two methods for stopping benefits. The approach you take depends on when you choose to stop benefits:
- Withdraw benefits: You can withdraw your Social Security claim within 12 months of starting benefits.
- Suspend benefits: If you aren't eligible for withdrawal, but you have reached your FRA and have not yet reached age 70, you can voluntarily suspend payments.
You can only stop Social Security if you started benefits less than 12 months ago or you have reached your FRA but are not yet 70 years old.
How to Stop and Restart Benefits
Once you have made the decision to pause Social Security payments, you will need to put in a formal request with the SSA to stop them as follows:
- To withdraw benefits: Complete Form SSA-521, stating the reason for the withdrawal. Send the form to the SSA. The SSA will notify you of your approval, and you will have 60 days from the approval to cancel the withdrawal. You can re-apply for benefits at a later date.
- To suspend benefits: Make an oral or written request to the SSA to stop Social Security benefits. You must contact the SSA orally or in writing if you want to restart payments before age 70. In the month you turn 70, however, your suspended benefits will be automatically reinstated.
You can only withdraw benefits once in a lifetime.
Consequences of Stopping Benefits
Before you make a request to the SSA, evaluate the financial impacts of the decision, including:
- Social Security benefit repayment: If you withdraw your application, you must repay what you received so far. Be aware that this also includes benefits that your spouse or children received, federal tax that was voluntarily withheld from your benefit, and money withheld from your benefit for Medicare Part B, C, and D premiums. If you spent some or all of the Social Security income you received, seriously consider whether you can afford to pay it back.
- Medicare benefit repayment: If you are entitled to Medicare, and opt to withdraw from Medicare when you withdraw Social Security benefits (this is not mandatory), you will have to repay Medicare Part A benefits.
- Changes in other government benefits: If you are entitled to railroad or veteran's benefits, your withdrawal may affect those benefits. Check with the relevant authority, either the Railroad Retirement Board or the Department of Veterans Affairs, to determine whether stopping Social Security would negatively impact your finances.
- Suspension of others' benefits: In general, if others, such as a spouse, claim benefits based on your record, their benefits will also be suspended.
- Social Security Income (SSI) benefit suspension: If you currently collect both Social Security and SSI benefits, suspending benefits suspends your SSI benefits.
The Bottom Line
If your benefit start date or your age permit you, you can stop your Social Security benefits and re-apply for them or restart them later to maximize Social Security payments or minimize taxes.
But only take the plunge after considering the financial impacts of the decision, especially if you have a spend-as-you-earn approach or have limited other income sources in retirement. Working with a financial advisor can help you assess the less obvious, but potentially far-reaching, personal and financial repercussions of pausing Social Security payments.