Should I Take An Opt Out And Return My First Year Of SS Benefits?

Jul 16 2020 - 4:45pm

Hi Larry,
I started taking my social security in August 2019 at age 63 (turned 63 in Aug 2019). Born in 1956, my full retirement age is 66 years 4 months In October I received a work offer to fill in while the company was in the hiring process. The job lasted longer than anticipated, up to July of 2020 and as a result of the wages I earned, I'm wondering if you recommend I take an opt out and return the first year of SS benefits. My SS is approximately$ 2,200 per month and I earned $ 16K in 2019 and an estimated $ 35K in 2020 as of July 30. The work assignment is now complete so these numbers are final earnings. Thanks for your advice.


I'm not sure if you mean that you only earned $16,000 in the entire calendar year of 2019, or if that's what you earned in the last 3 months of 2019. If you only earned $16,000 in the entire year of 2019, then Social Security could pay you all of your benefits for last year. The annual earnings test exempt amount was $17,640 in 2019, so none of your benefits for 2019 would need to be withheld if you earned less than that amount for the calendar year 2019.

However, if you returned to work in October 2019 and earned $16K in the last 3 months of the year on top of your earnings in the first part the year, then you probably weren't due any benefits at least for October through December 2019. So, if Social Security paid you for those months you'll likely need to pay back those benefits. Also, the earnings test exempt amount for 2020 is $18,240, and Social Security would need to withhold $1 of your 2020 benefits for each $2 that you earn in excess of that amount this year.

Therefore, depending on how much your total earnings were last year, you'll probably have to pay back a significant portion of the benefits you've received thus far unless you previously notified Social Security about your earnings so that they could suspend your benefits. If you filed for benefits effective with the month you reached age 63 then your benefit rate is roughly 78.33% of your primary insurance amount (PIA). A person's PIA is equal to their Social Security retirement benefit rate if they start drawing at full retirement age (FRA).

Your benefit rate would be adjusted effective at FRA to compensate you for any months between age 63 and FRA that you ended up not being paid benefits due to your earnings, but you wouldn't get that adjustment until FRA. So, if you don't withdraw the application you filed last year you'll be stuck with your age 63 rate at least until you reach FRA. On the other hand, if you withdraw your application and reapply with a later month of entitlement, you'll receive the higher monthly rate immediately. But, if you withdraw you'll have to pay back all of the benefits you've received so far, not just the $1 for $2 required due to your excess earnings.

You'll have to decide for yourself what to do, but if you want to withdraw your claim and reapply you'll need to act fast. Social Security only allows you to withdraw a claim if the withdrawal request is filed within 12 months of your initial month of entitlement. So, if your month of entitlement was August 2019 you'd likely need to submit your withdrawal request to Social Security no later than July 31 2020. For more information on filing a request for withdrawal, refer to the following Social Security website: You may want to consider using our software ( to help you determine your best option.

Best, Jerry