Friday June 5, 2026
Savvy Living
Can You Receive a Lump-Sum Social Security Payment?
I am getting ready to retire and have read that Social Security offers a lump-sum payment to new retirees. What can you tell me about this?
There is a little-known Social Security strategy that has been around for many years that provides retirees with a lump-sum benefit. However, retirees must be past their full retirement age to be eligible. There are also financial drawbacks you should be aware of before applying.
While workers can begin drawing their Social Security retirement benefits anytime between ages 62 and 70, full retirement age is 66 and 8 months for those born in 1958. Full retirement age rises in two-month increments every birth year to age 67 for those born in 1960 and later.
At full retirement age, you are entitled to 100% of your benefits. If you claim benefits earlier, your benefits will be reduced by 5% to 6.66% for every year you start before your full retirement age. If you delay taking your benefits beyond your full retirement age, you may receive 8% more each year until age 70.
Lump-Sum Option
If you are past full retirement age and have not yet filed for your benefits, the Social Security Administration (SSA) offers a retroactive lump-sum payment for up to six months of benefits. Let us consider an example where you planned to delay taking your Social Security benefits past full retirement age of 66 and 8 months but then decide to start them at age 67 and 2 months. You could claim a lump-sum payment equal to the six months of benefits when you were not receiving payments. In this example, if your full retirement age benefit was $2,500 per month, you would be entitled to a $15,000 lump-sum payment. If you decided at age 67 that you wanted to file retroactively, you would get only four months’ worth of benefits as your lump-sum payment. SSA rules will only allow retroactive payment for the months after reaching full retirement age, not the months before your full retirement age.
Drawbacks
The downside to this strategy is that, once you accept a lump-sum payment, you will lose the delayed retirement credits you have accrued. In addition, your future monthly retirement benefit will be reduced to reflect the amount you have already received. It will also affect the future survivor benefit available to your spouse or other eligible family members after you die.
You may also need to consider taxes. Depending on your income, Social Security benefits may be taxable, and a lump-sum payment could boost the amount of total benefits that are taxed. The federal government taxes up to 50% of Social Security benefits at ordinary income tax rates if your combined income exceeds $25,000. Up to 85% of these benefits are taxable if your combined income exceeds $34,000. For married couples filing jointly, the comparable income thresholds for taxing benefits are $32,000 and $44,000. Your combined income includes your adjusted gross income plus nontaxable interest income and one-half of your Social Security benefits.
To help calculate how much of your Social Security benefits are taxable, review IRS Publication 915 “Social Security and Equivalent Railroad Retirement Benefits” at IRS.gov/pub/irs-pdf/p915.pdf, or call 800-829-3676 and ask for a copy to be mailed to you.
Another potential disadvantage to the lump-sum payment of retroactive Social Security benefits is that if it boosts your yearly income over $106,000 ($212,000 for married couples filing jointly), then it will increase your future Medicare premiums too. For additional details on Medicare, read Medicare.gov/Pubs/pdf/11579-medicare-costs.pdf.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
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