You may have heard about the social security benefits do-over. If you haven’t, it is far too late. The plan with the social security benefits payback option, or social security double-dip, was to let younger individuals get early social security benefits to pay back later. When older, one can get more social security for starting over. You end up with lots of cash with the Social Security do-over. Even if you got an annuity from an insurance company, you nevertheless wouldn’t be able to make as much money. The Social Security benefits Administration wants this to end since it is so popular.
Social Security payback option gets more attention
Many people used the Social Security payback option in 2007. It was only about 500 individuals though. Kiplingers started to put out articles on how this makes Social Security benefits better, which is why it has become getting more popular. Kiplingers reports where the numbers were in 2009. The numbers had doubled. Retirees learned that they could repay the benefits they had collected so far, with no penalties and no interest and then restart them to receive bigger payouts. Better yet, a tax credit or a tax deduction can be claimed for income taxes paid on the benefits paid back.
Tips for double-dip Social Security
Social Security benefits are available to retirees. It is not until age 62 though. The “normal retirement age” is now being considered 66. This means at age 62, you only get 75 percent of what you could get at age 66. Each year you are able to wait past age 66 to 70 makes Social Security checks go up 8 percent . In 8 years of waiting, benefits increase 132 percent. You are able to get higher benefits by applying after paying back the benefits. It will make sure you get more for cost of living adjustments also as more benefits for a surviving spouse within the picture.
It won’t last much longer
The annual report of government trustees said that by 2016, payroll taxes won’t get enough to pay for social security anymore. In 2037, it will be much worse. The government will only be able to pay three quarters of benefits from incoming taxes. Since Kiplingers let the cat out of the bag, Social Security do-over’s have attracted the attention of cost-cutters. Daily Finance reports the Social Security Administration has sent a proposal to the Office of Management and Budget that gives retirees only one year to change their mind and use the payback option. Correcting the mistake of getting benefits too early rather than using an investment strategy is what this is for. The Social Security do-over is changing in this way.
Further reading
Kiplingers
kiplinger.com/features/archives/social-security-payback-option-may-disappear.html
Daily Finance
dailyfinance.com/story/social-security-administration-seeks-to-put-an-end-to-do-overs/19613383/
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