Q&A: Starting Social Security too early

Dear Liz: Does the Social Security Administration still allow a person to start taking Social Security benefits at age 62 and then later return the full amount received and begin taking the higher delayed benefits? For people who don’t need the income, this seems like a smart strategy as they could obtain the investment income on the benefits received from age 62 to 70 as well as the higher benefits amount starting at age 70.

Answer: Social Security closed that particular loophole in 2010.

As you know, Social Security retirement benefits increase each year you put off applying between age 62 and age 70, when benefits max out. An early start typically means a permanently reduced benefit.

Before 2010, people who started early, but who were able to repay all the money they received, were allowed to restart benefits at an older age and claim the larger checks as if they’d never applied before. This do-over prompted some recipients to apply early, invest the money and enjoy a kind of interest-free loan from the government.

People who make the mistake of starting Social Security too early still have a couple of options. They can withdraw their application for benefits within 12 months, but they are required to repay any benefits received, including benefits received by family members such as spousal or child benefits.

Another option is to wait until their full retirement age, which is currently between 66 and 67, and simply suspend their benefit.

No money has to be paid back and the recipient receives the delayed retirement credits that increase their benefits by 8% for each year they delay. Benefits will be automatically restarted at age 70, although the recipient can start them earlier, if desired.

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