Here's a Little-Known Social Security Move That Can Boost Some Retirees' Benefits

The steps to maximize Social Security retirement benefits before you claim them are straightforward. Work for at least 35 years. Make as much money as possible. Hold off on collecting your benefits.

But can you increase your benefits after you've already begun to receive them? The answer might seem to be a hard "no" aside from the annual cost-of-living adjustments (COLAs) . However, there is one twist that you might be able to use. Here's a little-known Social Security move that can boost some retirees' benefits.

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Social Security's version of a mulligan

In an informal game of golf, if you make a bad shot, mulligans are often allowed. A mulligan presents a second chance to replay a botched stroke. Some people don't know that Social Security has a version of a mulligan.

The Social Security Administration (SSA) allows you 12 months after your retirement benefits are approved to change your mind. If you choose to do so during this period, you can request in writing to cancel your benefits application.

You'll need to mail Form 521 to withdraw your benefits application to the Social Security office closest to where you live. As you might expect, you will need to repay any money you've received since you started receiving benefits. You'll also have to repay any amount withheld for Medicare premiums, taxes, and garnishments.

What if you've already reached your full retirement age (FRA) ? There's a similar move you can make. Instead of requesting to cancel your retirement benefits, you can ask to have your benefit payments suspended. If you're enrolled in Medicare Part B, you won't be able to have the premiums deducted from your Social Security benefits. Instead, the Centers for Medicare and Medicare Services will bill you directly.

How much this move could boost your retirement benefits

Holding off on receiving Social Security will boost your retirement benefits. Exactly how much of an increase you'll receive depends on when you cancel or suspend your benefits and when you begin receiving them again.

SSA applies an early retirement penalty of five-ninths of 1% for each month you receive benefits before your FRA, up to 36 months. If you begin receiving retirement benefits even earlier, your benefit will be further reduced by five-twelfths of 1% per month.

Anyone who opted to claim benefits at age 62 with an FRA of 67 would have their retirement benefits reduced by 30%. If you changed your mind and canceled your benefit then waited until your FRA of 67 to receive benefits, your monthly amount would be roughly 43% higher (the percentage of the increase is greater than the percentage of the penalty because of how the math works).

What if you initially began receiving retirement benefits after reaching your FRA then decided to have your benefits suspended? Your benefit will increase by two-thirds of 1% each month you delay receiving benefits until you reach age 70.

What if you wait too late?

Are you out of luck with regards to boosting your retirement benefits if claim before your FRA but don't cancel your benefits within 12 months of approval? Not necessarily.

Suppose you claim Social Security retirement benefits early but continue to work. Your benefits are based on your 35 years of highest earnings. It's possible that the amount of money you earn from working after claiming retirement benefits could replace one of your earlier earnings years. If so, SSA will recalculate your benefit.

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