In times past, Social Security recipients could file for benefits after reaching 62 years of age, later repay those benefits before reaching age 70, and then start over again drawing with a larger payout. This “do-over” provision has all but been eliminated.
This procedure had essentially allowed seniors to get an interest-free loan from the Social Security Trust Fund for as many as eight years. Of course, it came at a huge cost to the government.
Under this provision in the past, a senior could start drawing from his or her Social Security account when they reached the minimum age limit of 62. While their Social Security benefits were reduced by as much as 25% because they started drawing early, they could draw those benefits for up to eight years. Prior to reaching 70, the person could then seek to suspend payments and repay all they had received from Social Security. Once the repayment was accomplished, the senior could then reapply for Social Security benefits using their current age which would provide them with a much larger monthly Social Security check. Only the actual amount received had to be repaid – and no interest was charged.
While you had to have the cash available to repay Social Security, many media outlets that catered to seniors had started promoting the “do-over” provision as a great way to get an interest-only loan from the federal government. However, with the Social Security Administration’s recent decision, the “do-overs” are drastically limited.
While Social Security still allows you to change your mind about taking benefits, repay what you have collected and start receiving benefits again later, that decision now must be made within twelve (12) months of initially taking your benefits. In addition to the shortened time period, you are now limited to only one “do-over” in your lifetime. Further, you do not receive retirement credits for any month in which you actually received benefits.
So considering the amount of paperwork involved and the shortened time period allowed for “do-overs,” the best course of action is to make a careful decision about when you want to start your Social Security benefits – and then stick with it.