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Social Security: Lump sum payment explained

Social Security is typically paid out to retired Americans in monthly payments, but there is another option.

Social Security cards in front of a yellow background representing Social Security payments

It’s not well known, but it is possible to claim the benefits in a lump sum if you meet certain requirements.

Some may choose this because it’s easier to pay for their needs this way.

In order to qualify, you need to be full retirement age, which is 66-67 depending on the year you were born.

If you retired early at 62-65, you cannot choose the lump sum option.


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How lump sum Social Security payments work

If you wait until age 70 to retire, your monthly payment will increase for each year up until that point.

Once you hit 70 your payments will have gotten as high as they will go.

If you began retirement at your full retirement age, you could request a back payment worth 6 months.


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If your age is 66 but you did not immediately retire, your monthly payments will increase.

If you decided you wanted to start payment, you could choose to get up to 6 months of back payments all at once.

This means if your payment is worth $2,000, you could claim $12,000 if you deferred your payments for 6 months.

The downside is that you will reduce your future payments.


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What does the Social Security lump sum payment do to taxes?

Up to 50% of Social Security benefits are taxed when they end up being more than $25,000.

Once they exceed $34,000, they’re taxed up to 85%.

A lump sum could push you into a higher tax bracket, causing you to pay more in taxes than you would have if you took the payments monthly.

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