Social Security lump sum option when filing at 70 after withdrawal?
I'm trying to plan ahead for when I turn 70 in about 3 years. Last month (January 2025) I applied for my Social Security retirement benefits but then changed my mind and filed for withdrawal (thankfully before receiving any payments!). I want to wait until I'm 70 to get the maximum monthly benefit. Based on my current earnings, waiting will give me about $1,125 more per month than if I had kept my application active (though I understand this could change if my income fluctuates before 2028). Here's my question: I've heard people mention getting a "lump sum payment" when filing at 70. My financial advisor briefly mentioned it but didn't explain the details. Is this something I'd be eligible for? How does it work exactly - do I lose any of my delayed retirement credits if I take a lump sum? And is there something specific I need to request when I eventually file at 70? Really appreciate any insights from folks who've been through this process!
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Dmitry Smirnov
Yes, there is a lump sum option, but it comes with a significant trade-off. When you file at age 70, you can request up to 6 months of retroactive benefits as a lump sum. However, your monthly benefit amount will be permanently calculated as if you had filed 6 months earlier (age 69.5 instead of 70). So you'd get a one-time payment (6 x your monthly benefit at age 69.5), but your ongoing monthly payment would be less than if you filed at exactly 70. This is because you'd lose 6 months of delayed retirement credits (DRCs). The key question is whether having that immediate lump sum is worth the permanent reduction in monthly benefits.
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Sofia Perez
•Thanks for explaining. So basically I'd be giving up 6 months of DRCs for a lump sum? Do I specifically need to request this when I apply, or does SSA automatically offer this option? I'm wondering if there's anything I need to prepare for now.
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ElectricDreamer
I went through this EXACT situation two yrs ago!! Applied at 68, withdrew, then reapplied at 70. When I talked to the SSA agent for my final application, they offered me 6 mths of retroactive benefits but I turned it down because the permanent reduction wasn't worth it for me. My sister took the lump sum though - it worked for her because she needed to replace her car immediately. Just know that once you make the choice you CANNOT change it later!!!!
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Sofia Perez
•It's so helpful to hear from someone who's been through this! Did the SSA agent explain the retroactive option automatically, or did you have to specifically ask about it? I'm concerned they might not mention it if I don't bring it up.
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Ava Johnson
you don't actually have to wait till EXACTLY 70 to file. you could file at 69 and 10 months if you want. the DRCs are calculated monthly not just at birthdays. but yeah lump sum means you get back pay but smaller checks forever.
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Sofia Perez
•Oh, that's interesting about the monthly calculation. I thought it was based on my birthday milestones only. Good to know there's some flexibility there. Thanks!
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Miguel Diaz
Wait they OFFERED you a lump-sum at 70? I turned 70 in November and filed but nobody told me anything about lump sum options! I'm going to call them tomorrow. Social security never explains all your options clearly!!
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Zainab Ahmed
•The lump sum isn't automatically offered - you have to specifically request retroactive benefits when you file. But in your case, if you've already begun receiving benefits, it's unlikely they'll allow you to change your filing date retroactively. You generally have 12 months after filing to withdraw an application (and you'd need to repay all benefits received), but there's no provision for simply adjusting your start date after benefits have begun. However, it never hurts to call and ask about your specific situation. Just be prepared for a long wait time when calling SSA.
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Connor Byrne
I'm confused about something - if you already filed withdrawal request, doesnt that mean youve already made your decision? I thought once you withdraw you have to wait 12 months to reapply anyway. But maybe im misunderstanding your situation.
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Sofia Perez
•I think I might not have explained clearly. I applied in January, then shortly after (still in January) I filed Form SSA-521 to withdraw my application before receiving any payments. I'm not planning to reapply until I turn 70 in 2028 - I'm just trying to understand my options for when that time comes. Hope that clears things up!
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Zainab Ahmed
Let me clarify a few things about the lump sum option: 1. It's officially called "retroactive benefits" and is limited to 6 months maximum when filing after FRA 2. You must specifically request it when filing - it's not automatic 3. Your benefit amount will be permanently calculated based on the retroactive start date 4. This is different from suspended benefits (if you had suspended instead of withdrawn) One important consideration: The lump sum could potentially push you into a higher tax bracket for that year, so factor that into your decision. Also, if you're still working at 70, remember that there's no earnings test after FRA, so your benefit won't be reduced regardless of how much you earn.
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Sofia Perez
•Thank you for the detailed explanation! The tax implication is something I hadn't considered. I'll need to talk with my accountant about how a potential lump sum might affect my tax situation that year. Really appreciate the comprehensive information.
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ElectricDreamer
I forgot to mention in my previous comment - make SURE you save a copy of your withdrawal confirmation!!! When I filed at 70, the SSA had no record of my withdrawal and tried to tell me I couldn't file again!! Took THREE visits to my local office to sort out. Keep ALL paperwork!!
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Sofia Perez
•Oh wow, that's concerning! I did receive a confirmation letter for my withdrawal, so I'll make sure to keep it in a safe place. Maybe I should scan a copy too just to be extra careful. Thanks for the warning!
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