Dear Penny: Can I Take Social Security Now and Then Stop Benefits in 2021?

Dear A.,

When you start taking Social Security benefits, you have 12 months to withdraw your application, which will stop your payments. But you’ll also have to pay back all the Social Security money you’ve received. So I’d urge you not to take this approach if at all possible.

The problem is that we just don’t know when we’ll get back to normal life. I’d love to think it will happen by summer 2021, but I’m not especially confident. I wouldn’t count on mid-2021 being so business-as-usual that you can stay on top of your monthly bills and pay back six months’ worth of Social Security benefits.

Many people will still be recovering financially, so we may still be vacationing less. Plus, given that so many companies have figured out how to make remote operations work, it’s likely that business travel will never resume to pre-pandemic levels.

As I’m sure you’re aware, using Social Security as a temporary fix to get through tough times has permanent consequences. For every year you claim benefits before your full retirement age, you reduce your lifelong monthly payments by 6.66%. If you can wait beyond full retirement age, you’ll increase those payments by 8% for every year you delay until age 70.

Getting the biggest possible benefit upfront is your best defense against rising living costs. In 2021, the Social Security COLA will be just 1.3%, an increase that’s totally out of touch with the actual cost increases seniors face.

But I also get it: It’s so easy to tell people to wait as long as possible to claim Social Security.

Unfortunately, though, a lot of workers find themselves in the same predicament you do. Sure, you can plan to work and hold off on Social Security for as long as possible. But it just doesn’t work out that way for many workers who are forced to retire early, often due to loss of income or health issues.

The average monthly Social Security retirement benefit in 2020 is just over $1,500. Yours would probably be lower because you’d be claiming as soon as you’re eligible. But let’s use the $1,500 average for argument’s sake. Is there any other way you could earn $1,500 a month?

Could you replace some of your pet-sitting income with other gig work, like grocery delivery? Or could you get a part-time bridge job working at a store or doing a customer service job that lets you work from home? Could you put your skills with animals to use by working at a vet’s office?

Anything you can do to cobble together extra income to survive right now is worth considering.

I’d also look into other non-Social Security benefits you may qualify for. You can use benefits.gov to see if you’re eligible for other forms of assistance by filling out a short questionnaire. If you haven’t looked into jobless benefits, it’s at least worth a visit to your state unemployment website to see if you qualify.

None of these is likely to be a silver bullet. But if you can find other ways to bring in income temporarily, even if it’s a little bit from multiple sources, hopefully you can delay your benefits. If you have any retirement savings, it may make sense to take a small distribution to buy yourself time. Because of your age, you won’t get hit with an early withdrawal penalty. Since you’re about to turn 62, a reverse mortgage could also be an option if you own your home and have significant equity.

I’d only take benefits now if you’re OK with the reality that suspending your benefits and repaying your Social Security may not be possible a few months down the line. This is only an option if you can accept the likelihood that you’re reducing your benefits for life.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to [email protected].

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