To withdraw your benefits, you’ll need to complete Form SSA-521 (SSA.gov/forms/ssa-521.pdf) and send it to your local Social Security office. Be aware that you can only withdraw benefits once in a lifetime.
By suspending your benefits you’ll earn delayed retirement credits, which means your benefit amount increases for every month of the suspension. Your payment will go up by two-thirds of 1 percent monthly or 8 percent annually. A benefit of $1,500 monthly, for example, increases by $10 for each month you have benefits suspended. You can request a suspension by phone (800-772-1213) or in person at your local Social Security office.
If you start collecting Social Security and you do go back to work, but your income is modest, you may want to continue drawing your benefits while working at the same time. If your earnings are higher, it makes sense to stop your benefits.
Social Security has a “retirement earnings test” that says if you’re under your full retirement age and you earn more than $18,240 in 2020, Social Security will deduct $1 from your benefits for every $2 you earn over that amount. A less stringent rule applies for those who reach full retirement age in 2020 — $1 gets taken out for every $3 you make above $48,600 until you reach the month of your birthday.
It’s also important to know that if you were to lose some or all of your Social Security benefits because of the earning limits, they aren’t lost forever. When you reach full retirement age, your benefits will be recalculated to a higher amount to make up for what was withheld.
If you do decide to work and collect Social Security benefits at the same time, you need to factor in Uncle Sam. Because working increases your income, it might make your Social Security benefits taxable.
If your combined income is between $25,000 and $34,000 as an individual, or between $32,000 and $44,000 as joint filers, you will pay tax on up to 50 percent of your Social Security benefits. If you earn above the upper limit of these ranges, you will pay tax on up to 85 percent of your benefits.