Question: I am single, 66 and will turn 67 in March. I haven’t yet started collecting Social Security. I read that at one point, one could elect to take Social Security and then, before turning 70, return all the money to get the annual increase (which in this case would be 8 percent each subsequent year until 70). Is that still the case? I just spoke with a Social Security representative over the phone, but she seemed very confused on the point and kept talking about “suspending” payments. Hope you can clarify.
Answer: You have one year from the time you elect to file for your retirement benefit to withdrawal your election. So if you were 69 and filed, you could, at 70, withdraw, pay back all the benefits you received and then file for your benefit from scratch.
Why do so? Well, you don’t need to pay interest on the repayment, so you get an interest-free loan on a year’s benefits. But this is not a big enough deal to go through the aggravation. You do have the option, right now, to file for your retirement benefit and suspend its collection and then wait until 70 to start it up again. The advantage of doing this is that if, at any point between now and 70, you need an infusion of cash, you can withdraw your suspension and Social Security will pay you all your suspended benefits in one lump sum. But your retirement benefit from that point on will be calculated at the level it was at the time you suspended.
If you can collect a widows benefit or a divorced spousal benefit, your better play is not to file and collect one of those two benefits starting immediately and then wait until 70 to file for your own retirement benefit. Everyone needs to be very careful about filing for their retirement benefit since doing so precludes their collecting either a spousal, a widow(er), a divorced spousal, a child-in-care spousal, or a divorced widow(er) benefit by itself while letting their own retirement benefit grow and starting it later. If you do file for your retirement benefit, any of these benefits will be transformed from full into “excess benefits.” You will, as I like to put it, have landed in excess benefit hell.
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