It used to be possible to start collecting Social Security benefits at age 62, the earliest possible age, and later, at age 70, to pay back all the money you received from the Social Security Administration (SSA). You could then reapply for benefits as if you had never received anything.
Since you would be older, your monthly check amount would be higher. All the money you received over the years from SSA was like an interest-free loan from the government.
This loophole was closed in 2010, so you can no longer “borrow” money from SSA.
File and Suspend for Married Couples
There was another way to get more money from SSA – related to married couples – that was allowed for a few extra years.
Known as “file and suspend,” this practice involves the higher-earning spouse filing for Social Security benefits once they reach their full retirement age (FRA). The spouse is also allowed to begin collecting spousal benefits, which equal half of the filing spouse’s benefits.
Current Social Security Withdrawal Requirements
The law enacted in 2015 allows retirees to stop receiving Social Security payments if they wish. For example, if you got a new job or inherited money after starting to receive Social Security, you may want to suspend your benefits.
Delaying receiving Social Security benefits – and your spouse’s if you are married – until you reach age 70 will allow you to receive a larger benefit at that time.
To withdraw your application for Social Security payments, you must:
- Have reached full retirement age and have not yet turned 70
- Submit Form SSA-521 within 12 months of your benefits application
- Repay all benefits you and your family received based on your initial application
Payments must include the money designated from your Social Security check for Medicare parts B, C, or D premiums; the voluntary federal tax withheld for closed tax years; and any garnishments, such as child support. Once your withdrawal request is approved, you have 60 days to change your mind.
You can withdraw your benefits application only once in your lifetime.
Penalties for Early Payments
You can start receiving Social Security payments at age 62, but they will be reduced based on the number of months you have to wait until you reach full retirement age.
| Full Retirement Age | Age Benefits Start | Benefit Reduction Percentage |
|---|---|---|
| 66 | 62 | 25% |
| 66 | 63 | 20% |
| 66 | 64 | 13.3% |
| 66 | 65 | 6.7% |
| 67 | 62 | 30% |
| 67 | 63 | 25% |
| 67 | 64 | 20% |
| 67 | 65 | 13.3% |
| 67 | 66 | 6.7% |
The idea behind the lower monthly payments is that a person who lives to the average life expectancy will receive the same total amount of money regardless of when they retire.
Sources:
- Social Security Administration. “Benefits Planner: Retirement: If You Change Your Mind.”
- Social Security Administration. “Benefits Planner: Retirement: Voluntary Suspension of Benefits (Also Called “File and Suspend”).”
- Social Security Administration. “Bipartisan Budget Act of 2015 Closes Social Security Loophole.”
- Social Security Administration. “Benefits Planner: Retirement.”
Source: https://www.thebalancemoney.com/how-to-borrow-from-social-security-interest-free-2894595
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