Want a bigger Social Security payment? That may be possible if you’re willing and able to suspend your Social Security income temporarily.
There might be several reasons to suspend—and increasing your monthly income is just a side benefit. For example, maybe you want to minimize your income for Roth conversions or drawing down pretax accounts. Or, maybe you’re still working and paying a lot of tax on all that income.
What Happens When You Suspend?
When you temporarily turn off Social Security retirement benefits, you stop getting payments, and your benefit increases by 8% of your Primary Insurance Amount (PIA) per year. Note that you don’t add 8% to your current benefit. Instead, you add 8% of your benefit at full retirement age (FRA).
Technically, the increases occur monthly at ⅔ of 1 percent, which adds up to 8% over the course of a year.
When you reach age 70, or anytime before then, you can restart your benefit, and you’ll get a bigger monthly payment. The payments should automatically restart at 70 if you do nothing.
If you claim Social Security and voluntarily suspend your benefits, you can restart benefits at any time before age 70. If you do nothing, benefits generally restart automatically at age 70.
Continue reading below, or get similar information from this video.
A bigger monthly payment can be helpful in several ways.
Survivor benefit: If a spouse will take a survivor benefit off your record, it could make sense to maximize that benefit. Remember that the spouse typically takes over the larger payment in a household.
Tax-free income: At least 15% of your Social Security benefit is tax-free under current law. The bigger your benefit is, the more dollars you get free of tax. Plus, as we’ll discuss below, you might improve the chances of getting even more than 15% of your Social Security tax-free. And if tax laws change to make Social Security entirely tax-free, suspending would still help you in other ways.
Less dependent on markets: With a smaller Social Security payment, a bigger portion of your total retirement income comes from your savings. That might be great if you have substantial assets or if your accounts continually gain value. But if markets crash while you’re taking big withdrawals, you could run out of money. A bigger Social Security payment reduces that risk.
Remember that Social Security is guaranteed for life. You can run out of money in your investment accounts, but Social Security payments will keep coming.
Why Suspend Social Security Benefits?
What are some situations that might make the most sense for suspending your benefits?
Tax Planning
Tax strategies might be a primary motivation. For instance, you might want to take income strategically.
When you pause Social Security benefits, you may have the opportunity to spend down assets or convert pre-tax money to Roth in lower tax brackets. In either case, you’re moving money out of a pre-tax retirement account and adding the income to your tax return.
If you pursue those strategies while taking Social Security, the Social Security benefit can use up some of the “space” in the lowest tax brackets. As a result, you’d be forced to convert at income levels above and beyond your taxable Social Security benefit. But when your Social Security income is optional (when you can suspend), you could instead convert at lower income levels.
Remember that you’ll most likely withdraw money from your pre-tax retirement accounts for spending someday, and you generally pay tax on those withdrawals. Plus, you typically have required minimum distributions (RMDs) in your 70s, effectively forcing you to take taxable income.
If you have a substantial amount in pre-tax accounts, those RMDs can be quite large.
When your income rises above certain levels, you might notice some of the following issues:
- You end up in higher tax brackets, when you could have taken income in lower brackets.
- You’ll have to pay more for Medicare each month due to IRMAA.
- You don’t qualify for certain deductions and programs because your income is too high.
- More of your Social Security benefit might be included in your taxable income.
Those issues might be solved or reduced by spending down (or converting) from pre-tax accounts. And getting rid of that Social Security income often helps you maximize the benefits of those strategies.
Still Working?
If you earn money from work, that might be another reason to suspend your benefit. Whether you’re working part-time, you’re consulting, or you retired and decided to go back to work, you might have more than enough with that extra income plus Social Security.
If you don’t need the money now, it could make sense to suspend. Otherwise, that money might just end up in a bank account or a taxable brokerage account. There, it might not benefit you as much as the 8% per year delayed retirement credits (DRCs) plus inflation adjustments from Social Security.
Plus, you might have to pay income tax on the earnings in those taxable accounts.
Other Assets
If you have other assets to spend from, suspending might make sense. Perhaps you get an unexpected inheritance, and you no longer need Social Security income for cash flow. In that case, it could make sense to spend what you have in exchange for a bigger benefit later.
Suspend and Restart Rules
How does it work when you suspend benefits?
You can temporarily suspend your retirement benefit at any time after you reach FRA.
You do not need to repay any of the benefits you’ve received. Unlike when you withdraw an application (typically within 12 months of starting benefits), you get to keep the money. The payments simply stop until you re-start benefits.
You can restart your Social Security income whenever you want. Your payment increases for each month you wait, but you don’t need to go in 12-month increments or wait until age 70. Be aware that it can take time to process requests, so ask the SSA what to expect.
Current spouses, children, and others who receive benefits on your record will also stop getting payments when you suspend. However, divorced ex-spouses will not be affected.
You can suspend and restart multiple times, if needed. That might make sense if you find yourself in and out of the workforce at times you didn’t expect. But all of that must happen within a few years: You can’t suspend until after FRA, and there’s no reason to delay beyond age 70.
Example of Suspending Social Security
These examples ignore inflation to get the concept across. The real numbers would likely be a bit higher.
Assume you are 68 years old (beyond FRA), and you claimed at age 62. Your PIA is $1,000, and your current monthly benefit is $700 per month. You decide that it makes sense to suspend, and you want to wait two years before restarting Social Security.
- Current benefit = $700
- 8% of $1,000 = $80 (0.8 times 1,000)
- Two years of increases = $160 ($80 times 2)
- Benefit when you restart: $860/month
Or, let’s say your PIA was $2,500/month.
- Current benefit = $1,750
- 8% of $2,500 = $200 (0.8 times 2,500)
- Two years of increases = $400 ($200 times 2)
- Benefit when you restart: $1,950/month
That’s an annual increase of $4,800 per year.
Note that we used full years in this example, and the monthly increases add up to 8% per year, but you get a small voluntary delayed retirement credit (DRC) for each month you suspend. Again, you can suspend for as many or as few months as you want.
Drawbacks of Voluntary Suspension
Spending Down?
You’ll spend down assets some, and have less available in liquid investments. That’s not necessarily foolish, as you’ll get a higher income later. And you can always restart benefits if needed. For instance, if markets crash, you might prefer to restart benefits instead of taking big withdrawals out of a portfolio that’s down.
If you suspend to do Roth conversions, you might not have much less. Ultimately, you’re just shifting money from pretax accounts to Roth. The money you spend on taxes may be gone, but you’ll have tax-free money that might have the same after-tax value as it would have had in pre-tax accounts.
Medicare Logistics
You might need to pay for Medicare directly, instead of having any premiums deducted from your Social Security benefit. That’s not the end of the world, but it requires some legwork.
Missed Opportunity?
If you’re concerned about Social Security’s solvency, there are pros and cons of pursuing a bigger benefit. Some people want to “get it while you can.” That said, you might still come out ahead if Social Security cuts benefits and you suspend for a bigger payment. For instance, if there are 20% cuts across the board, you’re probably better off getting 80% of a bigger benefit (as opposed to 80% of a smaller benefit).
Be mindful of the family maximum and other rules if you’re considering suspending. It’s possible that you won’t end up with more money, in some cases.
Calculator for Suspending Social Security
The calculator shows benefits and increases in today’s dollars. In other words, it assumes that Social Security benefits will match inflation. That might or might not be accurate. The actual future dollar amounts you’d receive should be higher than what’s shown here after inflation.