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Take SS at 62--Reapply at 70 for Larger Benefit
Old 02-08-2008, 11:51 AM   #1
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Take SS at 62--Reapply at 70 for Larger Benefit

Forbes article on taking Social Security early. Then cancelling and reapplying at age 70 for higher benefit. Interview and discussion of ramifications with Kotlikoff. SS says it is entirely legal, and they have provided form 521 to do it with. Trade In Your Social Security Check - Forbes.com
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Old 02-08-2008, 11:55 AM   #2
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And more discussion of this tactic in another Forbes article:

The 62/70 Solution - Forbes.com
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There is the hazard
Old 02-08-2008, 12:14 PM   #3
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There is the hazard

of dying before then, but this would only be a problem for couples. Whether you actually come out ahead would really depend on life expectancy though. A couple usually would, but a single with a short lifespan may not. If your goal was leaving an estate, this would reduce it, so you would have to decide whether that is good or not.

One thing they touch on is taxation of retirement distributions. They may find it better to increase distributions early for Roth conversions, delaying SS until later.
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Old 02-09-2008, 03:53 PM   #4
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If you employ this 62/70 strategy and some of Soc Sec is taxable, can you file amended returns to recover taxes paid on SS income? How far back can you go to amend your returns?
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Old 02-09-2008, 05:36 PM   #5
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How far back can you go to amend your returns?
I believe 3 years.
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Old 02-10-2008, 05:09 AM   #6
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No need to amend any tax returns. There is a provision already in the tax code for this IRC 1341 and you can go back however long is needed. BTW I have a pending request to do exactly this. Just waiting for the SS people to give me the repayment #. However, it is not as much of a financial good thing as many may think at first blush. Do all the # crunching and you may find out you will be a bit ambivalent about doing it.
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Old 02-10-2008, 07:55 AM   #7
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Mr Wood: We also have a pending application with Social Secutiy to implement the above plan. We are haveing the most difficult time receiving information reguarding the details of repayment amounts and monthly increases. How long have you been waiting for your information? And can you share any details of the numbers as you understnd them?

Thank you and regards,
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Old 02-10-2008, 08:09 AM   #8
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Mr Wood: We also have a pending application with Social Secutiy to implement the above plan. We are haveing the most difficult time receiving information reguarding the details of repayment amounts and monthly increases. How long have you been waiting for your information? And can you share any details of the numbers as you understnd them?

Thank you and regards,
I filed my application (Form 521 with Cover Letter) on Sep 4, 2007. I got a phone call from SSA in Chicago sometime in Oct 2007. Very nice lady and all she wanted to know was "are you sure you know what you are doing?". We talked for about 30 minutes and she said she was satisfied I did know what I was doing but suggested I go into the local SSA office and talk about it. I said sure and made an appointment (about a 3 week wait). Went to the local SSA office and the person I spoke with had no idea why I was there. I explained it to her and she called SSA in Chicago to see what the status of the application was. She told me that the application was "being worked up". I asked her what that meant and she said they were going to start processing it. I also asked when we could expect an answer and she said maybe by Jan 2008. That is where it sits now. I haven't bugged them about it and assume I will get a response sometime. Since I am 67 and DW is 70 there is no real hurry. I have worked up the numbers as repaying ALL benefits less DW smaller benefit based on her own record and repayment of all MEDICARE Part B Benefits. Based on our ages the numbers situation for us may be different than yours but, if you take your Age 62 benefit number and multiply it by 1.225 (increase for full retirement age versus early benefits, assuming age 65.5 as "full benefits age"), multiply by 1.07 for each year beyond full retirement age and up to age 70, and then add in each annual CPI increase one at a time (since they will be compounded) you should have your benefit number and then you take half of that number for DW and you should have a pretty close number. The approximate difference is about 57.5% plus CPI increases - but make sure you look closely as this look great but when you factor in MEDICARE Part B Premiums, lost income on the repayment amount, AND what it may do to your Income Tax situation when you start drawing again and, if you have traditional IRA's, how the RMD's are going to impact.

If you want to discuss in more detail PM me.
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Old 02-10-2008, 01:02 PM   #9
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R. Wood: Thank you. Please check PM.
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Old 02-10-2008, 05:07 PM   #10
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If you repay your SS and use IRA money do you have to pay taxes on the withdrawal? I think I read that if you purchase an annuity with IRA funds you do not pay the tax until you receive payments.
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Old 02-10-2008, 05:36 PM   #11
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One risk is that you'll start at age 62 and over the following 8 years, this little give-away will be patched up by the SSA. Once congress gets serious about SS reform, loopholes like that one will be fair game, I would guess.
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Hi all
Old 04-24-2008, 02:15 PM   #12
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Hi all

Hi all..doing research for future retirement...
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future possibles
Old 04-24-2008, 02:44 PM   #13
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future possibles

Here is my future:

WIFE & I are 50 currently. But due to #2 I am redoing a lot of my retirement planning now.

1. Rockwell Pension (small) ... $400/mth (wife will get this when I go).
2 Trust acct from dad that will continueally give me 6% of the trust per month... this currently is about $2320/mth for the rest of my life.
3. SS

4. I figure on working till I cant work anyway
5. Wife works currently only to pay our grocery bill. may decide to have her not work (except at home).


Untill I reached this website about 62/70 deal, I had figured on waiting till max age to start collecting.

Excluding potential healthy issues, is it in my interest to draw early (espefcially since u can reapply).
??
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Old 04-24-2008, 05:23 PM   #14
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I'm not quite clear on what is meant by "repaying Medicare Part B benefits". If they withheld say, $6,000 from your check over the past 6 years for the premium, that is what you paid in. How can you pay back what you paid in. If they paid out say, $25,000 to medical providers would you have to pay back that difference- $19,000? I don't understand.
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Old 04-24-2008, 07:44 PM   #15
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You would have to reimburse for the Medicare Premiums paid on your behalf. Simple way to figure it out to take the "Benefits for 2XXX" listed on the annual Form SSA 1099-SM that you get from the SSA each year to do your taxes. You "repay" all benefits ($$$) received from SSA regardless if they withhold Medicare Preimums for MEDICARE. Your eligibility for MEDICARE is totally separate from the SSA. All you Baby Boomers that wait for full eligibility (66-67 years and beyond) WILL pay MEDICARE Preimums from age 65 to whenever you start taking SS benefits (there are some exceptions - but the majority will pay by check/direct debit to MEDICARE).
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Old 04-24-2008, 07:49 PM   #16
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Is that a complex way to say you pay back the gross amount of the SS benefit before deduction for the Medicare premium rather than just the net amount that went in your bank account? I figured that.
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Old 04-25-2008, 06:30 AM   #17
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Yes, not very complex (you get a buck you payback a buck).
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