The Little-Known Social Security Rule That Could Score You Larger Benefits After You've Filed

There's a lot riding on your Social Security claiming decision. If you wait to file until you reach full retirement age, which is 67 if you were born in 1960 or later, you'll get to collect your monthly benefits in full. If you file early, which you can do starting at 62, your benefits will be reduced.

A lot of people rush to claim Social Security at 62, or at various points ahead of full retirement age, because they want the money sooner. That's understandable. But you may not realize how detrimental an early claim can be at the time.

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If you've just retired at 62, for example, and haven't really navigated life in the absence of a job-related paycheck, you might think you're OK to accept reduced benefits from Social Security only to realize you're going to be strapped for cash month after month.

The bad news is that the initial Social Security benefit you lock in at the time of your claim is typically what you'll get for life, not accounting for the program's annual cost-of-living adjustments. But one lesser-known provision could make it possible for you to score larger Social Security checks -- even if you've already been getting benefits for a while.

Are you able to undo your Social Security claim?

If you filed for Social Security ahead of full retirement age and now regret it, you're not necessarily stuck with reduced checks. Thanks to the program's little-known do-over option, you may be able to withdraw your application for benefits and file again at a later point in time.

To take advantage of this option, though, you need to withdraw your application within a year and also repay all of the Social Security benefits you received. And if you don't have the money to do that, you may not be able to exercise your do-over.

However, there may be creative ways to come up with that money, such as tapping home equity if that makes sense for your situation. So it pays to explore your options if you're unhappy with the benefit you're getting.

Put a lot of thought into your decision from the start

Even though all Social Security recipients get a do-over in their lifetime, it's not the easiest option to fall back on. There's a time limit and the constraint of potentially having to come up with a lot of money.

That's why it's so important to try to get your claiming decision right from the beginning. Since a do-over isn't easy to pull off, filing strategically could help you avoid getting stuck with monthly checks that are too small for comfort.

Before taking benefits, create a monthly budget that shows you exactly how much income you need. Then, assess your non-Social Security income streams, whether it's a pension, savings, or anticipated earnings from part-time work.

From there, you'll know how much money you need from Social Security to keep up with your costs. And once you have that information, you can create an account at SSA.gov and access your most recent Social Security earnings statement.

That statement should contain an estimate of your benefit at full retirement age and also show you how much of a reduction you might be looking at if you file early. If the smaller number doesn't work for your budget, you'll know you need to wait.

You should also know that while sitting tight until full retirement age arrives helps you avoid reduced monthly benefits, waiting beyond that point could work to your advantage. Each year you delay your claim past full retirement age boosts your benefits by 8% for life. And while that increase runs out once you turn 70, it's a great way to lock in added monthly income that could provide more financial stability for the duration of your retirement.

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