One of the most important decisions you have to make when you approach retirement is “When should I start taking Social Security?”  Why is this such a big deal?  Because the age at which you file for benefits and the way in which you take them- your own? a spouse benefit? Etc.- literally affects the income you will receive for the rest of your life.

I receive a lot of questions about the “best” time to start benefits.  My answer?  “When you need the money.”  After all, that’s what Social Security is there for- to provide you with a basic level of income after you stop working.  According to the National Academy of Social Insurance, Social Security is the only source of income one-out-of-five retirees receives.

On the other hand, if you managed to save money in other types of accounts- such as a 401(k), IRA, private annuity, bank deposits, investments- that you can draw from to cover your living expenses for a few years after you quit work, hold off.  The longer you delay the start of Social Security benefits, the larger your monthly check.  Just don’t wait past age 70.

But what if you are receiving Social Security and want to stop it?  Maybe you filed for benefits because you were laid off and then found another job?  Or maybe retirement isn’t as much fun as you expected?  You’re bored.  You miss your former colleagues.  Six months of 24/7 with your spouse makes you want to kill each other! 

Can you ask Social Security to stop sending you your monthly check?   Might that mean you could qualify for a larger benefit at a later date?

The answer to both questions is “Yes.”  But the steps you have to take are different depending upon whether or not you are “full retirement age,” which is currently 66.  This column will cover what’s required if you are under “FRA;” next week I’ll go into the rules for stopping your benefit once you reach your full retirement age.(1)

If you are not yet full retirement age and wish to stop receiving Social Security the process is called “Withdrawing your Application.”  And, you have to make up your mind pretty quickly.  In fact, once you have received benefits for 12 months, it’s too late.

Step 1: fill out Form SSA-521. http://www.socialsecurity.gov/online/ssa-521.pdf. This should take only about  five minutes to fill out, buy you’ll need to explain why you want to stop your benefits.  If you already signed up for Medicare, you need to specify if you want to continue this coverage.

Step 1a: Was anyone else –such as a spouse or child- receiving income based upon your filing?  Since they will also lose the benefit they’ve been getting, you need their written permission to withdraw your application. 

Step 2:  Bring or send Form SSA-521 to your local Social Security office for processing.

Step 3: Write a big check.  If your request is approved, you must be prepared to immediately re-pay all of the benefits you have received.  This includes your monthly Social Security income, as well as any amounts you instructed Social Security to deduct and send to the IRS to cover quarterly income tax payments or to Medicare to pay your monthly insurance premiums.

It’s your responsibility to re-figure or re-file your taxes if you’re due money back from the IRS and to argue with Medicare about re-funding your premiums. (Good luck.)

In addition, you also have to reimburse Social Security for benefits paid to anyone else based upon your filing, such as a spouse or minor children.

The good news?  There’s no interest charged on the amount you have to re-pay Social Security.

Step 4: Understand the implications for Medicare.  Anyone who starts receiving Social Security before ago 65 is automatically be signed up for Medicare as they approach that age.  However, if you stop receiving Social Security, you need to remember to sign up for Medicare yourself about three months before your 65th birthday.  

If you are already covered by Medicare, you can choose to keep it even if you stop receiving Social Security.  However, since premiums for Parts B, D and C can no longer be deducted from a monthly Social Security benefit, you’ll have to pay them directly to the Centers for Medicare and Medicaid. If your check arrives late, you could lose your insurance coverage (for anything other than Part A).  There are equally important considerations if you are insured via a Medicare Advantage plan.  The decisions you make can have serious consequences (such as higher premiums when you sign up again later), so visit or call your Social Security office to make sure you fully understand the ramifications.

Step 5: Don’t ever try this again.  If you’re under full retirement age, you only get one ”do-over.”

Next week: The how and why of stopping Social Security once you reach full retirement age.

1. 66 is the full retirement age for anyone born from 1943-1954.  If you were born in 1955 or later, full retirement age is gradually increasing.  See http://www.socialsecurity.gov/retire2/agereduction.htm.

Ms. Buckner is a Retirement and Financial Planning Specialist and an instructor in Franklin Templeton Investments' global Academy. The views expressed in this article are only those of Ms. Buckner or the individual commentator identified therein, and are not necessarily the views of Franklin Templeton Investments, which has not reviewed, and is not responsible for, the content. 

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