Social Security benefits are very helpful for all retirees. However, it is very important to decide when to apply for Social Security benefits. For example, it is possible that after you applied for benefits, and started receiving them, you were offered a great job opportunity. You may wonder if you could stop receiving Social Security benefits without losing them and what the process is.
Fortunately, the Social Security Administration (SSA) allows this only for one-time exceptional circumstances. Your earnings will not affect your benefits if you have reached retirement age. However, your income can reduce your benefits if you have not reached full retirement age.
This article will explore going back to work after getting Social Security benefits approved.
Stopping Social Security To Restart Your Career
You will have to submit a ‘withdrawal of benefits’ form if you want to stop receiving Social Security benefits and start working again. However, you can only do this if you have applied for retirement benefits in the last 12 months.
Additionally, depending on your situation, you might be asked to repay all social security benefits you have received, including any given to your spouse, children, or other beneficiaries. The SSA will then handle your submission as if it never happened.
Remember, the SSA also demands their signature on a consent form because additional recipients may be impacted.
You will need to submit Form SSA-521 to withdraw your application. You will have up to sixty days if you want to change your mind and withdraw your application. If not, your request will be completed, and the benefits received must be returned.
Consequences of a Delayed Response To Stopping Social Security Benefits
You may be late to stop the Social Security payments if you missed the deadlines and it has been at least a year since you started receiving benefits. There is, however, a different approach you can apply.
You can postpone your retirement benefits after you reach full retirement age, which for most current employees is 67. In this case, you will not be required to repay any previously received benefits.
Instead, you will begin accumulating credits for postponed retirement. This means that your monthly Social Security payouts will increase by nearly 8% for every year you delay receiving benefits, which must happen no later than at the age of 70.
When it comes to your earnings, you may have the best of both worlds if you choose to work during the years you suspended payments.
Since you are likely to make more money working during those years than you would have just by receiving Social Security. In the meantime, your Social Security income is increasing by almost 8% every year without any effort on your part.
Effect of Unretirement On Social Security Benefits
Before returning to the workforce, retirees who want to unretire should take into account the following four important factors regarding Social Security benefits, which have been briefly discussed above:
1. You Might Have Some of Your Social Security Benefits Withheld
If a retiree returns to work, age is the major determining factor in how their Social Security benefits will change. Benefits may be reduced or withdrawn depending on a person’s ‘full retirement age’.
Age 62 is the youngest age at which a person is eligible for Social Security retirement benefits. Still, it does not mean that they are at full retirement age.
According to the SSA’s official website, anyone born between 1943 and 1954 can retire at age 66.
The full retirement age is gradually raised to 67 for everyone born between 1955 and 1959, adding two months for every birth year. Individuals born in 1960 or later are the last in this trend and are expected to retire at 67.
For every $2 earned over the annual income cap by those receiving benefits who are under full retirement age for the whole year they return to work, $1 is taken away. The yearly cap for 2023 is $21,240.
The deductions are slightly lower for people who work in the year they reach full retirement age (but haven’t yet). For every $3 earned over the $56,520 earnings cap, the SSA will take $1. The administration also notes that the threshold only considers earnings up until the month you reach full retirement age.
2. Possible Repayment Requirements for Any Advantages You Have Received
You may cancel your Social Security application if you are under 70 years old and decide to leave retirement within a year of doing so. A form must be submitted to the Social Security Administration to do this.
Any benefits you already received, including those withheld from checks, must also be reimbursed. You can later reapply if you choose this path.
3. You Are Still Qualified for Full Benefits When You Reach Full Retirement Age
Your benefits will not be impacted if you decide to start working after reaching full retirement age. According to the SSA, the benefit amount will be calculated to exclude the months where payments were decreased or withheld because of your excess earnings.
4. Learn The Particular Rules for Retiring and then Resigning in the Middle of the Year
A special rule is applied to earnings for one year—typically the first year after retirement—for those who decide to return to work in the middle of the year.
The SSA offers the following example: If a person decides to retire in June but starts their own business in October, they will continue to get full benefits when they are considered fully retired, regardless of their annual earnings.
According to the SSA, the special rule will give you the full benefits amount for the entire month you are regarded as retired in the following cases:
- You are deemed retired in any month in which your earnings are $1,770 or less and you did not conduct major services in self-employment. You must be under full retirement age for the entirety of 2023.
- When you reach full retirement age in the year 2023, any month in which your income is $4,710 or less and you did not conduct a significant amount of self-employment, is regarded as your retirement month.
Working more than 45 hours per month for an organization or between 15 and 45 hours per week in a highly skilled occupation is what the SSA defines as providing considerable services as a self-employed person.
Final Thoughts
In conclusion, choosing to stop receiving Social Security benefits and start working again requires serious thought and consideration, depending on your situation. You can file a withdrawal of benefits and give back the money you received if you applied for retirement benefits within the previous 12 months.
If you have missed this opportunity, you can also postpone your benefits to accrue delayed retirement credits after you reach full retirement age. Additionally, there are potential deductions, income thresholds, and criteria like age and salary that impact benefits.
