Don't raise the retirement age, cont'd
Earlier, a reader mentioned that the "full retirement age" for Social Security is really 70: That, and not the more commonly cited 66, is when you can begin collecting the maximum yearly benefit. The difference is large: Compared with benefits you get starting at age 62, the benefits you get at 70 are about 70 percent larger.
Seniors can elect to “reset” the year they start taking benefits by paying back what they got before the new start date. So a 70-year-old who started getting checks at 62 can pay back eight years of benefits and start getting much larger checks from then on. What I didn’t realize, and what stupidly never occurred to me, is that the paying back is without interest. …
And it is more than just an interest-free loan. It is also a free option. The downside risk for waiting until age 70 to collect benefits is not subtle. You might not live that long. Kick off the day before you turn 70 and you get nothing. But start at 62 and you can have it both ways. Draw checks for eight years and if you are still in reasonably good health, pay it back interest-free and reset. If not, well, you got some money from the feds while you could.
The danger, of course, is that Social Security could (and, it seems, should) change the rules in the middle of your play. But then you're still getting checks: You haven't lost anything. You just haven't gained it, either.
September 7, 2010; 3:07 PM ET
Categories: Social Security
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