He Claimed Social Security at 62 Amid AI Bubble Anxiety. Now He Regrets It as His Chance to Undo the Decision Nears Its End

Quick Read

• Mark claimed Social Security at 62 because he was worried about the market, permanently accepting a 30% cut that leaves him about $600 a month below what he would have received by waiting until 67.

• Social Security permits a one-time withdrawal of an application within 12 months through Form SSA-521, which cancels the early claim and restores full future benefits.

• Withdrawing the claim and then waiting until 70 can produce about $2,480 a month, compared with roughly $1,736 if he simply suspends at 67, a difference of $744 per month.

• Americans who work with a financial advisor have saved more than twice as much for retirement on average. Find out what one could change for you: SmartAsset's free quiz matches you with up to three vetted fiduciary advisors in about five minutes. (Sponsor)

Mark reached age 62 this spring. Around the same time, a Wall Street Journal article compared today’s enthusiasm around AI lending with the credit boom that preceded the financial crisis. He decided to file for Social Security. His reasoning was straightforward: a guaranteed government check seemed safer than waiting on a 401(k) that could lose a large share of its value.

Not long after, the market’s nerves showed up in the numbers. The VIX, a closely watched measure of volatility, rose to 31, signaling mounting concern about a selloff. For Mark, that was another reason to secure Social Security while he could.

Months later, the fear has not disappeared. Tech stocks have shed $1 trillion in value as concerns about the AI surge continue. What has changed is Mark’s view of the decision he made. He still has savings and does not need the check, but he now understands that he locked in a smaller benefit for life, and the deadline to reverse course is approaching.

A 30% Reduction That Can Last for Decades

For people born in 1962 or later, full retirement age is 67. Filing at 62 means accepting a 30% reduction from the full benefit, and that cut is permanent.

------

Americans say they need $1.46 million to retire comfortably. Whether that amount works for you depends on three questions many people never fully answer:

• 1. How much can you withdraw each year without running out?

• 2. When should you claim Social Security?

• 3. How much will taxes take from your 401(k) or IRA?

A fiduciary advisor can help answer all three using your actual numbers. SmartAsset's free quiz matches you with up to three who serve your area.

------

If Mark’s benefit at 67 would have been $2,000 a month, then claiming at 62 gives him $1,400. That means $600 less every month, or $7,200 a year, for the rest of his life. If his wife outlives him, the smaller benefit can also reduce what she receives as a survivor.

Use your own figures to see how the claiming age changes the monthly benefit:

One Chance to Undo It

Social Security allows a retirement application to be withdrawn within 12 months of the first month of entitlement by filing Form SSA-521. That option is available only once. If the request is approved, the earlier application is treated as though it was never filed. When Mark applies again later, his benefit will be calculated fresh at that new age, without any early-claiming reduction carried forward.

What Must Be Repaid

The do-over is not free. He must repay the money he and his family received, along with any amounts withheld for Medicare premiums, taxes, and garnishments. If Medicare entitlement is withdrawn, Medicare Part A premiums may also need to be repaid. Most 62-year-olds are not enrolled in Medicare, so that usually would not apply in Mark’s case.

If Mark has collected 10 checks, he would owe $14,000, plus any taxes withheld from those payments. Family benefits make the calculation more complicated. If his wife or a minor child received benefits on his record, anyone whose benefits would be affected must agree in writing. Those benefits also have to be repaid.

The repayment can also affect his taxes. Federal tax rules generally reduce taxable Social Security benefits by repaid amounts from the same year. If Mark repays more than he receives in a later year, IRS Publication 915 explains the rules, including possible tax relief when repayments exceed $3,000.

Why Waiting to Suspend at 67 Costs More

Mark has another option. He can keep his claim in place and, once he reaches full retirement age, suspend payments and earn delayed retirement credits until 70. Those credits add 8% a year.

The credits are applied to his reduced benefit. Suspending would lift his $1,400 monthly check to about $1,736 by age 70. If he withdraws now and waits until then to claim again, the payment would be about $2,480.

That difference is $744 a month, or nearly $8,928 a year. Suspension also stops any family benefits tied to his record, and Medicare will bill him separately for Part B premiums.

Market fear does not change the formula. A claim filed in a panic follows the same rules as any other. Trustees project that Social Security’s retirement and survivor trust fund will be depleted in 2032, at which point 78% of scheduled benefits would still be payable. The combined retirement and disability funds are projected to be depleted in 2034, with 83% payable. Neither forecast changes the rules for undoing an early claim.

Calculate the Cost Before Filing Form SSA-521

1. Get the full repayment amount and know where it will come from. Ask Social Security for an exact figure that includes every family benefit and any amounts withheld. Use cash or bonds if possible. If you sell stocks during a downturn to cover the bill, you could lock in the very losses that pushed you to file in the first place.

2. Have a new claiming plan before you withdraw. Decide the age at which you will file again and how savings will bridge the gap. The 12-month clock starts with the first month of entitlement, so track the deadline carefully. You get only one withdrawal, which makes this one of the hardest retirement decisions to reverse.

A spouse’s benefit, a health diagnosis, or a pension offset can change the numbers materially. Run your own calculations, ideally with someone who understands your full situation, before the window closes.

Not Every Financial Advisor Is Required to Put You First (Sponsor)

SmartAsset’s free matching tool connects you only with fiduciary advisors registered with the SEC or a state regulator and available in your area. Fees still vary from advisor to advisor, so you are matched with up to three to compare, and there is no obligation to hire any of them.