Not everyone waits until 70 to claim Social Security. But while some people need to access Social Security earlier than planned due to financial hardships, they may rebound while receiving government checks and discover that they don’t actually need Social Security right now.
Once you hit full retirement age, you can pause Social Security payments now for higher benefits later. Here’s what to know.
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What is the Social Security 'pause button'?
Anyone who was born in 1960 or later reaches full retirement age at 67, while people born earlier have retirement ages of 66 plus a few months, depending on when they were born. When you hit that number, Social Security gives you the option to pause your retirement benefit. It’s different from withheld holdings that take place if you claim Social Security early and still work full-time. It’s also different from withdrawing your Social Security application within the first 12 months and getting a do-over.
During this time, you won’t receive government checks. However, delayed retirement credits will accumulate in your account up to age 70, letting you secure higher benefits for the rest of your life. It may make sense to hit this pause button if your income has increased and you can keep up with living expenses even if you aren’t receiving Social Security.
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How much bigger your checks can get
Each year you delay benefits in full retirement, your benefit goes up by 8% per year plus the rate of inflation. "You can restart your payments whenever you'd like, or they'll restart automatically at age 70," according to the Social Security Administration.
It’s extra money if you can wait that long. However, the trade-off is giving up some extra income. Not every Social Security recipient has the financial means to withstand a sudden lack of government checks until they turn 70.
This strategy can be optimal for people who are in good health and have enough income sources to keep up with living expenses. Then, you can lock in a larger guaranteed monthly benefit later in retirement without disrupting your current lifestyle. A higher benefit also matters for your spouse if you are the higher earner. That’s because the survivor benefit is based on the survivor’s benefit or the spouse’s benefit, depending on which amount is higher.
The catch retirees need to understand
The main catch with this pause button is that you have to navigate living expenses without Social Security benefits for as long as you want to defer them. It can be a major shock for people who have relied on government checks for multiple years but want to accumulate delayed retirement credits.
Family members who receive benefits on the retiree’s record generally do not get those payments during the suspension, but divorced spouses may be treated differently. You may also have to pay Medicare Part B premiums directly to keep your coverage.
When you reclaim benefits, you won’t receive a lump sum. Instead, you get higher benefits for the rest of your life. It’s important to consider your financial situation, health and other factors when deciding if hitting the pause button on Social Security benefits is the right move. Run the numbers, consider Medicare and family-benefit effects and contact Social Security before suspending payments.
