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Started Social Security too early? 5 possible fixes

(MoneyWatch) "I wish I'd read your articles before!"

That's the reaction of some of my friends in their 70s who started their Social Security benefits at age 62. They're reacting to the articles that I've written about the advantages of delaying Social Security benefits. This strategy, which has also been recommended and written about by many other financial experts, has a good chance of delivering the highest amount of Social Security income over your lifetime. But about three-quarters of all Americans start their Social Security benefits at age 62, the earliest possible age with the lowest monthly benefit.

Suppose you're like my friends and started Social Security too early. Or suppose you got laid off, started your Social Security to make ends meet, and then found a job. Now what?

Until December 2010, you could invoke a "do over" by paying back any benefits you'd received at any time and then move forward as if you had never started your benefits. But the Social Security Administration changed that rule, and now it limits the pay-back option to within 12 months of starting benefits.

A recent blog post on the Social Security Timing website offered four excellent ideas for fixing this situation:

Option 1: Pay it back. If you're still within 12 months of starting benefits, you can pay all the money back and be treated as if you'd never started benefits.

Option 2: Go back to work. If you're under your Full Retirement Age (or FRA, which is age 66 for today's retirees), Social Security's earnings test will automatically reduce your Social Security benefit to the extent your wage earnings exceed $14,640. If your Social Security benefits are reduced, when you eventually stop working, your benefits at that time will be increased to reflect the value of prior benefit reductions.

Option 3: Voluntarily suspend. Once you reach your FRA, you can voluntarily suspend your Social Security income and receive credits for delaying your income when you restart your benefits in the future (but no later than age 70).

Option 4: Maximize benefits for your spouse who hasn't yet begun taking benefits. Your spouse's benefit is based on the age when he or she starts their benefits, not when you started, so you have the opportunity to make the best decision for your spouse. You'll find software at the Social Security Timing website that can help you and your spouse make the best decision for when your spouse should begin taking benefits.

The blog post mentioned above includes more details and also offers examples of the above options.

To these options, let me add one more possible solution. If you're receiving Social Security income and have other sources of retirement income, you can simply invest your Social Security income until you really need the money. I've previously written about this strategy and showed that while this usually won't produce more retirement income compared to delaying taking your benefits, it's better than spending all your benefits with nothing saved for the future.

When should you take Social Security?
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Start Social Security early and invest? Ask the actuary

As with any mistake you might make in life, it won't do any good to beat yourself up about it. Just do the best you can to correct things and move on.

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