Infatuation Rules
Photo by Olena Bohovyk Pexels Logo Photo: Olena Bohovyk

Can I take my Social Security in a lump sum?

If you wait until after your full retirement age to claim your Social Security retirement benefits, there is a little-known rule that could entitle you to a large chunk of cash all at once. This provision enables retirees who meet this requirement to receive up to six months of retroactive benefits in one lump sum.

moneyrates.com - Social Security Offers Lump Sums? Yes, But Beware - MoneyRates.com
How long should you give a guy space?
How long should you give a guy space?

I recommend three weeks because anything less than that is too short and anything over that starts to get a bit too long. If you can wait until he...

Read More »
Last updated Jul 31, 2021
Which food produce more sperm?
Which food produce more sperm?

A study of 250 men who had sperm analyzed at a fertility clinic showed that men who ate higher amounts of fruits and veggies, particularly green...

Read More »
Last updated Oct 19, 2020

Social Security Offers Lump Sums? Yes, But Beware

You might qualify for a lump sum payment of up to six months worth of retroactive Social Security payments. But is this option worth its drawbacks?

Our articles, research studies, tools, and reviews maintain strict editorial integrity; however, we may be compensated when you click on or are approved for offers from our partners. If you wait until after your full retirement age to claim your Social Security retirement benefits, there is a little-known rule that could entitle you to a large chunk of cash all at once. This provision enables retirees who meet this requirement to receive up to six months of retroactive benefits in one lump sum. Sound appealing? While this option may be a great choice for some, there are several things to consider before you go for it — namely its impact on your future benefits.

How Social Security’s lump sum option works

The rule is a bit complicated, but Kia Anderson, a spokesperson for Social Security Administration, illustrates a possible scenario: Say a retiree reached full retirement age in November, but then waited to file an application for Social Security benefits until next November. In this example, the retiree might be entitled to retroactive benefits — paid in a lump sum — beginning from May, or six months before he or she finally filed for benefits. Because of the six-month limitation on this rule, the first six months of benefits would effectively be gone for a retiree in this situation. But for those who need a large chunk of cash for an emergency or for those who are in bad health and don’t expect to live long, the six months of benefits that are still available may be much appreciated. Still, there is a major drawback to claiming retroactive benefits in a lump sum: It will reduce your ongoing monthly Social Security benefits for the rest of your life. This means less money in your savings account and that retirees should examine their circumstances before choosing this option, says Anderson. “It depends on a person’s individual situation as to whether they would like to file for retroactive retirement benefits,” she says.

What a man must do in a relationship?
What a man must do in a relationship?

A real man commits to the relationship fully. He doesn't cheat. He is loyal to his partner and knows that relationships take hard work to keep...

Read More »
Last updated Oct 29, 2019
What is the power of his presence?
What is the power of his presence?

His presence comes through the power of the Holy Spirit. The presence of God radically changes your life and the lives of others. He gives power to...

Read More »
Last updated Dec 7, 2019

Making the call

Russ Settle, founding partner with Social Security Choices in Elkton, Maryland, says that it makes sense to claim the retroactive payment if you’ve received bad news about your health or if you face a financial crisis that requires an immediate infusion of cash. But in most other situations, it’s a bad move because claiming the retroactive benefits locks you into an earlier “official” retirement date, even if you waited until after your full retirement age to claim your benefits. In other words, if you take six months of retroactive benefits in a lump sum payment at age 67 when your full retirement age is 66, your monthly Social Security payments going forward will be calculated as if you started taking payments at age 66 and a half. “There are many situations where taking the benefits in a lump sum would not be advisable because you are lowering your monthly benefits for the rest of your life,” Settle says. “But if you expect a relatively short life expectancy, it makes sense. Giving up the money now and gaining it later assumes that you’ll be around later to get it, which might not be the case if you don’t expect to live long.”

What if I want to invest that lump sum?

You might think that you’ll be able to invest the six months of retroactive benefits wisely, and that this makes taking the lump sum payment a sound financial move, even if you don’t face a financial emergency or serious health problem. But Robin Brewton, vice president of client services with Overland Park, Kansas-based Social Security Solutions, said that clients all too often spend the money they plan to invest. She’s seen it with clients who take their Social Security benefits before they reach full retirement age and doubts that those who take the lump sum payment are any more likely to invest their sudden bundle of cash. “They have every intention of investing that money,” Brewton says. “They believe that they can earn more in the stock market or by investing it, even though the research proves that you can’t do that in today’s market. But people start to get those checks and they don’t do it. They spend the money. And once you’re accustomed to living on those checks, you’re not willing to set that money aside for investments.”

How often should you meet in a LDR?
How often should you meet in a LDR?

“It's important to see each other as much as possible,” said Patel. “I know depending on the distance it can feel hard, but it's important.” She...

Read More »
Last updated Apr 21, 2022
What debts are not forgiven at death?
What debts are not forgiven at death?

Medical debt is not discharged after death. It becomes one of the liabilities of the estate. Jun 9, 2022

Read More »
Last updated Dec 12, 2018

There are tax implications to consider too. As much as 50 percent of your Social Security benefits are taxable if your total annual provisional income — which includes your adjusted gross income, tax-exempt interest and one-half of your Social Security benefits — comes to $25,000 or more if you are single or $32,000 or more if you are married and filing jointly. Up to 85 percent of your Social Security benefits are taxable if your total provisional income is higher than $34,000 if you’re single or $44,000 if you’re married and filing jointly. Taking the lump-sum payment, then, might boost your provisional income enough to cost you at tax time. Settle says that for most retirees, taking the lump sum payment instead of the higher monthly payments for life simply doesn’t make sense. “In this low-interest-rate environment, getting any rate of return that would be close to the rate of return that delaying Social Security benefits would offer you is really impossible,” he says. “That assumes, of course, that you expect to live long enough to take advantage of those higher monthly benefits.”

More from MoneyRates.com:

6 key facts on Social Security

Preparing for Social Security: a 7-point checklist

5 Social Security tips for couples

moneyrates.com - Social Security Offers Lump Sums? Yes, But Beware - MoneyRates.com
How can I make him feel my absence?
How can I make him feel my absence?

This guide is everything you need to have your guy missing you like crazy (while loving you even more). Don't be available all the time. ... Play...

Read More »
Last updated Feb 17, 2018
What do most relationships lack?
What do most relationships lack?

Trust Issues The lack or loss of trust is one of the most harmful impediments to a couple's long-term success. Without trust, a relationship misses...

Read More »
Last updated May 7, 2020
What does Luke 14 28 30 mean?
What does Luke 14 28 30 mean?

Jesus demands that in terms of interest, attachment, and priority everything must be secondary to our Savior: 33 In the same way, any of you who...

Read More »
Last updated Apr 22, 2020
How do I know my big three?
How do I know my big three?

Your big three refers to your sun, moon, and rising (or ascendant) placements on your natal chart. Your natal chart is where the planets, moon, and...

Read More »
Last updated Jul 27, 2022