Tulsa, Oklahoma – A financial advisor recently posed a common inquiry about Social Security benefits. The advisor asked whether his 68-year-old client could suspend his Social Security retirement benefit to earn delayed retirement credits. The answer to this question involves several important tax and personal finance considerations for the client.
According to guidance from the Social Security Administration, if an individual has reached full retirement age but is not yet 70, they can request to suspend their retirement benefit payments. By doing so, they will earn delayed retirement credits for each month their benefits are suspended, resulting in a higher benefit payment when they decide to resume them.
The decision to suspend benefit payments should be made after consulting with a financial advisor, and the individual can make a request to suspend payments by contacting the Social Security Administration or submitting a written request. Benefit payments will be automatically reinstated the month the individual reaches age 70, or sooner if they request it prior to that age.
However, there are several factors to consider when contemplating a suspension of retiree benefits. If an individual voluntarily suspends their retirement benefit, others who receive benefits on their record will not be able to receive benefits for the same period that the retiree’s benefits are suspended, with some exceptions for divorced spouses. Additionally, Medicare Part B premiums cannot be deducted from suspended benefits, meaning the individual will be billed for such premiums.
Overall, the rules related to suspending Social Security retiree benefits are complex, and it’s important for individuals to seek expert advice from a tax and/or legal advisor when considering this option. Any decision about Social Security benefits should take into account not only the potential for earning delayed retirement credits, but also the impact on family benefits and Medicare considerations.