My Mom Wants to Cancel Her Social Security Payments. Is Waiting Until 65 Worth It?

As always, The Motley Fool cannot and does not provide personalized investing or financial advice. This information is for informational and educational purposes only and is not a substitute for professional financial advice. Always seek the guidance of a qualified financial advisor for any questions regarding your personal financial situation. If you'd like to submit your question for feedback, you can do so here.

One of the most important decisions you'll make regarding your Social Security benefits is when to sign up. It sounds simple in theory: Just wait until you're at least 62 and feel ready to receive checks.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

But there's actually a lot of strategy in choosing your claiming age, because it directly affects the size of your checks. Undoing a Social Security application is complicated, so you need to clearly understand the consequences of your choice.

Image source: Getty Images.

That's what one woman found out when she signed up for benefits at 64, but then decided she wanted to wait until 65 instead. Her child took to Reddit (NYSE: RDDT), asking if undoing the claim was even possible and whether it was worth it. Here's what you need to know if you ever find yourself in a similar situation.

My mom wants to cancel her retirement so she can wait until she is officially 65
byu/ezava001 inSocialSecurity

How to undo your Social Security claim

In this woman's case, it was possible for her to undo her Social Security claim -- with one big caveat. The Social Security Administration (SSA) permits you to withdraw your application within the first 12 months after signing up. However, to do so, you have to pay back all benefits you've received until that point. You also have to pay back any benefits that others claiming on your work record, like your spouse, have received during that time. If you're not able to do this, you can't undo your claim.

If you're wondering why someone would want to give up their benefits, it has to do with how the SSA calculates your checks. When you claim Social Security before your full retirement age (FRA) -- 67 for most people today -- you face an early-claiming penalty of up to 30%. Or, put another way, your checks increase for every month you wait to apply; this continues until you reach 70 and you qualify for your maximum benefit.

If you're too late to withdraw your Social Security application, you should know that you'll still have the option to suspend benefits once you reach your FRA. This is when the SSA stops sending you checks until you either request that they start again, or turn 70. During the time you're not receiving checks, you'll slowly grow your benefits by 2/3 of 1% per month, or 8% per year. That could add 24% to your checks if your FRA is 67. However, you'll need to cover your expenses on your own during that time.

Is waiting until 65 worth it?

The other big question from the Reddit post was whether it was even worth undoing the Social Security claim to delay until 65. There's nothing magical about that age. However, claiming at 65 could help you reduce the early-claiming penalty you'd face, compared to claiming immediately at 64 or earlier.

Whether it's the right move for you depends on two key factors: your finances and your life expectancy. If you cannot afford to cover your expenses without Social Security, delaying may not give you any real benefit. Though you could get larger checks down the road, they might not be enough to dig you out of the financial hole you could find yourself in if you have to take on debt until you're ready to sign up.

When that's not an issue, the ideal claiming age usually depends on life expectancy. Claiming early makes sense when you're in poor health and don't know how long you'll be around to claim checks for; it's better to get as many as possible, rather than risk not getting any at all.

On the other hand, if you're in good health, you might get a larger lifetime benefit by waiting until your FRA, or even until age 70, to apply. This could be the way to go if you expect to live into your 80s or beyond.

It's ultimately your call. It doesn't hurt to compare your options if you haven't signed up for Social Security yet, or if you already have but plan to withdraw your application. Just keep in mind that if you do withdraw it, you can only do so once. So think very carefully before you submit your application again.

The $23,760 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.

View the "Social Security secrets" »

Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.