Social Security Offers 6-Month Lump Sum for Retirees, Cutting Future Monthly Benefits
Updated
Updated · The Independent · Jun 15
Social Security Offers 6-Month Lump Sum for Retirees, Cutting Future Monthly Benefits
3 articles · Updated · The Independent · Jun 15
Summary
Retirees who claim Social Security after full retirement age can elect a one-time lump sum worth up to six months of back benefits instead of keeping the higher monthly payment earned by waiting.
That option effectively trades delayed-retirement credits for cash now: benefits rise 8% a year after full retirement age until 70, but taking the lump sum reduces the ongoing monthly check.
A retiree expecting $2,500 a month could see that fall to about $2,300, while the upfront payment may help cover medical bills, debt or other urgent expenses.
The lower monthly benefit can also shrink a spouse’s survivor benefit, and the lump sum is generally taxable income, adding another cost to the decision.
The choice is drawing attention as inflation hits a three-year high and 60% of Americans over 50 say they worry their retirement money will not last.