The Social Security Do-over

I had no idea this was even possible but I was emailed this article from Kiplinger Magazine today.  If you click to the second page it describes a situation where a beneficiary began taking reduced benefits at age 62, paid them back interest free, and was able to reapply for higher benefits.

If you’re not familiar with how social security benefits are determined the short explanation is that beneficiaries may start receiving benefits at age 62. However, by doing so they receive a discounted monthly payment. The longer they wait the more they receive. At age 70 their benefits reach a maximum level.

What this article suggests is that a beneficiary who begins taking early benefits at a discounted payment may pay back all the benefits they’ve received and effectively reapply for a higher level of monthly benefits. This strategy is not without risks but it may be a great tool especially for retirees who elected to take early social security benefits at a discounted payment and expect to live into their 80s and beyond.

There is an application for the mortgage industry. Suppose a retiree determines that this strategy is appropriate for them and they have substantial equity in their home. They may be able to borrow the money to pay back their earned benefits which would allow them to begin receiving the increased monthly amounts.

Here is another article I found on the subject.