Social Seurity Redo?

[clod]

You can apparently pay back all benefits paid, say from 62 y/o to 66 y/o, and re-set SS payments to the 66 y/o level, about 25% higher. There is also some tax deduction involved. Anyone ever done this, and if so is there a CPA/advisor around here that is knowledgable in this to assist?

[Hal :-)]

http://www.ssa.gov/retire2/withdrawal.htm

[REDCART]

Sounds attractive but consider the downside. You withdraw you SS application, pay back SSA $75-$100K in benefits received over 8 years, and then you pass three months later. There's no refund to your survivors or your estate. Has it happened, yup!

George

[brostholder]

Sounds attractive but consider the downside. You withdraw you SS application, pay back SSA $75-$100K in benefits received over 8 years, and then you pass three months later. There's no refund to your survivors or your estate. Has it happened, yup!

George
The other side of that is that if you live another 20 years, you've given yourself a 50% raise for all of those years. If one starts collecting at 62 ($1600/mo), in 20 years he will have collected $384,000. If he pays back what he has collected in the first 4 years, and at age 66 starts collecting $2400/mo, he will have collected $460,800 after 20 years, a 20% increase. Also, once you start collecting at the higher amount, if you die I believe your spouse continues to collect the higher amount. And, if you dont need the money you are collecting from age 62 to 66, you can invest it and keep any interest or capital gain you make on it. Essentially the government is giving you an interest free loan for 4 years.

[Taj44]

I agree with what you're saying, but the numbers don't jive if the raise from age 62 to 66 is 20% higher (20% added on to $1600 is $1920 not $2400). I haven't researched the exact percentage; the percentage increases even more if you don't take SS until age 70, however you better plan on living a long time! I guess you need to take a look at your overall health, the financial needs of your spouse should you pass early, etc.

[Chopper]

Both of the previous two examples are incorrect. In order to receive a $1,600 benefit at age 62, your age 66 benefit would be $2,133. When you reduce 2,133 by 25% you arrive at a $1,600 benefit at age 62.

The following link shows the percentage reduction based on your year of birth. The reduction jumps to 30 percent if your normal retirement age is 67.

http://www.socialsecurity.gov/retire2/agereduction.htm

[Chopper]

Here is another way to look at this situation. If your age 66 benefit is $2,000 then your age 62 benefit would be $1,500. If you start collecting the $1,500 benefit at age 62, you will have received a total of $288,000 when you reach age 78. If you start collecting your $2,000 benefit at age 66, will will have received a total of $288,00 when your reach age 78. It is only after age 78 that you start gaining by waiting until 66 to start collecting your social security.

The average life span in the US is now 78.4 years. I know we all hope to live longer than that. I started collecting social security at age 62. I had already retired so there wasn't any conflicts regarding how much I could earn in a year without forfeiting some of my social security benefit. Everyones situation is different so you need to do what is best for you. I have no regrets for taking the reduced benefit. When I reach 100 maybe I will wish I had waited.

[rjm1cc]

The theory behind the SS monthly payment is that you are paid the same total amount over the period of time you collect. You example shows this.
Another way to look at this is that if you were going to purchase an annuity to increase your monthly income, repaying social security and taking an increased monthly benefit will be the cheapest annuity you can get and it is inflation adjusted to boot.
If you can aford it and do not care whant happens if you die early the pay back should be a good deal for you. A little easier is just not taking your benefits until you are 70. However depending on your spouces work history you may want to do a file and suspend. By the way my guess is that the spouce with the lower earnings should probably files as early as possible if their spousal benefit will be higher than their own benefit. This can be a complicated decision so you might want to get some professional help with the numbers.

[BobKat1]

I decided to take my SS at 62. For us, it turned out to be a good decision. It was a great supplement during the recession and allowed us to avoid taking much from our retirement savings during the downturn.

[2 Oldcrabs]

Depending on your income, you may have paid Income taxes (Fed & possible State) on a portion of your SS. If you you choose a "Do Over" you may want to file amended Tax returns.

[DaveK]

If you do this repayment and refile, is there a Medicare involvement? Just asking, I don't know. I'd hate to screw up my Medicare and have to reapply and end up paying a higher rate.

[rjm1cc]

No. You have to repay the gross SS you received. Thus if you had a deduction for Medicare you have to repay the amount deducted.

[zcaveman]

No. You have to repay the gross SS you received. Thus if you had a deduction for Medicare you have to repay the amount deducted.

So what do you do for the Medicare amount you had deducted. From what I understand, if you are not having the Medicare payments taken out of SS you have to pay it yourself. They don't start taking Medicare out until you are 65 and 65 is 65 so you have to pay for part B. Does he have to give back all of the medical reimbursements made for him via Medicare?

[2 Oldcrabs]

12/8/2010: Social Security "Redo" is no longer an option. SS claims it benefits the wealthy. Reported on Yahoo Finance (US News) today.

[Boomer]

12/8/2010: Social Security "Redo" is no longer an option. SS claims it benefits the wealthy. Reported on Yahoo Finance (US News) today.

Thanks for catching this very recent news.

Here is an article from the Kiplinger website that gives some details.

http://www.kiplinger.com/features/archives/social-security-eliminates-payback-option.html

Boomer

[rjm1cc]

You nean the wealthy that had to save all their life so they could continue to support themselves in retirement without a private or goverment pension?

[getdul981]

They're the ones!!! Those dirty low down scoundrels. How dare they!!

[2BNTV]

From Yahoo finance today is the following article:

Social Security Payback Option Eliminated
by Emily Brandon
Thursday, December 9, 2010
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Retirees will no longer be able to get an interest-free loan from the Social Security trust fund, the Social Security Administration announced today. Effective on December 8, retirees will not be able to pay back benefits already received in exchange for higher Social Security payments going forward. Here's a look at how the new Social Security rules could impact your checks.

Free Loans Eliminated

Little-known provisions of Social Security law previously allowed individuals to begin payments at age 62, pay back all the benefits received at age 70 without interest, and then reclaim at a higher rate due to delayed claiming. However, this claiming strategy, which is employed primarily by affluent households, costs the federal government and Social Security trust fund money. "The processing of these withdrawal applications is also a poor use of the agency's limited administrative resources in a time of fiscal austerity -- resources that could be better used to serve the millions of Americans who need Social Security's services," says the SSA in a statement. The Center for Retirement Research at Boston College calculated that if all the American workers with enough liquid assets to repay their Social Security benefits utilized this strategy it would cost the system $5.5 billion.

Under the new rules, Social Security beneficiaries may withdraw an application for retirement benefits only within 12 months of their first Social Security payment and are limited to one withdrawal per lifetime. "There is little to be gained by investing benefits for only 12 months," notes the SSA in the rule.

Retroactive Benefit Suspensions Discontinued

Another way Social Security beneficiaries were previously allowed to boost their checks was by suspending benefits already received retroactively, repaying the amount received, and then getting higher checks going forward. The new rules allow retirees to voluntarily suspend benefits only for months in which they did not receive payments. Beneficiaries may also suspend future payments beginning the month after the request is made.

These changes will be applied only to old-age benefit recipients, not survivor and disability beneficiaries. Comments on the new rules will be considered until Feb. 7, 2011. The agency says it will publish a final rule that responds to relevant comments

[eremite06]

Quoting my latest AARP Bulletin,"....the sum you'd be paying back may be quite large, perhaps prohibitive. You must repay all benefits that you and your family received, plus any money withheld from your checks for Medicare Parts B,C and D; also any tax withheld."

It's a moot point for me since I'm on SS disability, though I believe "a bird in the hand is worth two in the bush."

[gongoozler]

This changes seems like a proposal and not an actual change in the law at this point, otherwise why would they be taking comments until February 7, 2011 on a law that is already in effect?

:read:

[LEWIS]

Depending on your income, you may have paid Income taxes (Fed & possible State) on a portion of your SS. If you you choose a "Do Over" you may want to file amended Tax returns.

It is all based on how much you have paid in ob how much you get. If you get SSD you will get what you would get at 65 or 66 what ever the date mybe :crap2::crap2: