Friday, February 22, 2008
Social Security: repay, then restart later for higher benefits
Sandra Block has a story on p B3 of USA Today, Friday, Feb. 22, “Have your retirement cake early and eat it, too: you can repay benefits, then restart them at a higher rate,” link here. The article also appears here in Insurance News.
This would occur if someone started social security at 62 while unemployed and then suddenly got a high paying job, which would push him over the earnings limits until reaching full retirement age. It’s possible to pay the sum back without interest, and restart later (as late as age 70-1/2) with a higher monthly draw. However, if someone had invested the income in the meantime, he or she still owes taxes on that as ordinary income (according to ordinary tax law), and may have paid taxes on up to 85% of social security benefits depending on investment income in addition to social security.
The Baltimore Sun has a similar story by Eileen Ambrose from Feb. 17, 2008, with a lot of other little known social security tips, here. The story is titled “The benefits of social security can be surprising.”