Golfers love the idea of a Mulligan.
Hit your first tee shot into the trees? Take a Mulligan. Start over. Pretend the first one never happened.
Life, unfortunately, doesn’t work that way. Most of our decisions are permanent. We live with them, learn from them, and hopefully make better ones the next time around.
But every once in a while, life gives us a second chance.
Social Security does too.
“I’ve Already Claimed. There’s Nothing I Can Do.”
One of the biggest misconceptions I hear is, “Dave, I’ve already claimed my benefits. There’s nothing I can do now.”
Not necessarily.
Let me give you an example.
A gentleman unexpectedly lost his job at age 62. Like many people, he needed income immediately, so he began collecting Social Security. On paper it made sense, but claiming at 62 reduced his retirement benefit by roughly 30% for life.
Several months later, something unexpected happened. He found another job.
Now he had an additional problem.
Not only had he locked in a substantially reduced benefit, but because he was working before reaching Full Retirement Age, he was also subject to the Social Security Earnings Test. If his earnings exceeded the annual limit, he would have to repay part of the benefits he had already received.
2026 Earnings Test: You lose $1 in benefits for every $2 you earn above $24,480.
That’s when I shared something he had never heard before.
The Social Security Administration Allows You One Mulligan
If you’re within twelve months of filing for benefits, you can withdraw your application, repay the benefits you’ve received, and it’s as though you never filed.
Think about that.
Your Social Security record has been reset. The permanent reduction disappears, and you regain the opportunity to make a better claiming decision later.
I’ve recommended this strategy to several clients after completing a comprehensive retirement income analysis. Many times, withdrawing the application and temporarily living off IRA distributions or other available assets resulted in significantly higher lifetime income. Better yet, it often created a much larger survivor benefit for a surviving spouse.
Like golf, however, you only get one Mulligan. Miss that twelve-month window and your Mulligan is gone.
Missed the Window? You’re Still Not Out of Options
So what happens if you miss it?
When you reach your full retirement age, another opportunity becomes available. Although you cannot withdraw your application anymore, you can suspend your benefit. During the suspension period, your benefit earns Delayed Retirement Credits of approximately 8% per year until age 70.
Imagine someone who claimed at age 62 and accepted the roughly 30% reduction. At age 67 they realize they really don’t need the income after all. Rather than continuing to collect reduced benefits, they suspend them and allow those delayed credits to accumulate over the next three years.
Will it completely erase the reduction from claiming early?
No.
But that additional 24% increase dramatically narrows the gap while also increasing the future survivor benefit available to a spouse.
Many retirees can bridge those three years by drawing from IRA assets while they’re often in one of the lowest tax brackets they’ll ever experience before Required Minimum Distributions begin.
The Real Lesson Here
The lesson is bigger than Social Security.
Retirement planning isn’t about making one perfect decision. It’s about recognizing when circumstances change and understanding the options available to you.
The biggest mistake isn’t claiming Social Security too early. The biggest mistake is believing you no longer have any choices.
Sometimes the best financial decision is simply knowing when you’re entitled to take your one Mulligan.
Let’s have a great summer, and as always, never hesitate reaching out if you think I can be of help to you or your clients.
David P. Zander
CFP Emeritus Board ™
dzander@back9pro.com
260-615-0078
