Social Seurity Redo?
 

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?

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.

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.

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

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.

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.

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.

Possible income tax
 

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.

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.

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?

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/ar...ck-option.html

Boomer