Insider Tips the Agencies Won’t Tell You

The Social Security Administration is tasked with administering benefits, not providing strategic financial advice. As a result, there are powerful nuances and strategies that are perfectly legal and available but are not widely publicized. Understanding these can lead to substantially better outcomes.

Insider Tip 1: The Hidden Power of COLA on a Delayed Benefit

Everyone knows that Social Security benefits are adjusted for inflation through a Cost-of-Living Adjustment (COLA). What most people do not realize is how this interacts with delayed benefits. The COLA is applied to your primary insurance amount every year, even if you are not yet collecting benefits. Let’s say you are waiting from age 67 to 70 to claim. During those three years, your PIA of $2,200 will be increased by the official COLA each year. If inflation is running at 3%, after the first year your base benefit becomes $2,266. The next year’s COLA applies to that higher number. By the time you reach 70, the 24% delayed retirement credits are applied to a PIA that has already grown with inflation for several years. This compounding effect creates a benefit that is significantly larger than most people calculate, providing a powerful, inflation-adjusted income stream for life.

Insider Tip 2: The Strategic “Do-Over” You Have in Your Back Pocket

What if you claim early and then regret it? Perhaps you claimed at 62 out of necessity, but a year later you land a great part-time job and no longer need the income. The SSA offers a little-known but potent option: you can withdraw your application. This is a one-time opportunity that must be exercised within 12 months of your first benefit payment. To do it, you must repay every dollar you and your family have received, including any money withheld for Medicare premiums. If you do this, it is as if you never claimed at all. Your benefit can then continue to grow, earning delayed credits until you decide to claim again later. This is an incredibly powerful “undo button” that provides a safety net for your claiming decision.

Insider Tip 3: Decouple Your Medicare and Social Security Decisions

This is one of the most common and costly misconceptions in retirement planning. Many people believe they must file for Social Security to enroll in Medicare at age 65. This is absolutely false. You should evaluate your Medicare enrollment and your Social Security claiming strategy as two separate decisions. For most people, it is critical to enroll in Medicare Part A and B during their Initial Enrollment Period at age 65 to avoid lifelong late-enrollment penalties, unless they have qualifying health coverage from a current employer. You can and should enroll in Medicare at 65 even if your plan is to delay claiming Social Security until 70. Tying these two decisions together can lead to either a suboptimal Social Security benefit or costly Medicare penalties.