Author Topic: Getting SSA early, invest, then pay back without penalty?  (Read 395 times)

DeniseNJ

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Getting SSA early, invest, then pay back without penalty?
« on: August 05, 2019, 11:36:21 AM »
If you take your benefits early, you will get less forever as a penalty.  If you wait, you are missing out on many monthly payments.  There's a break even point at about 80, so that if you plan on living longer than that you do better to wait and if you don't live that long you do better taking your money as soon as you can.  If you take your money early and invest it instead of blow it, your break even point would be later.

But, if you pay back past benefits you can basically start over.  Like if you take your benefits at 62 you'd start getting your reduced benefits early.  If you pay back every dime at 67 then you can start getting your unreduced benefits as if you had never collected. So wouldn't it make sense to take your money early, save/invest it, and then pay it back and start getting your bigger benefits?  Would that be a good way to hedge your bets.  So if you die early or need the money, you won't have missed those months of benefits, but if you make it to 70 you can pay back your benefits and start getting a bigger monthly check.  You'd have to do the math of course.  Like if I pay back 100K and make 1K more per month then it would be worth paying back at 70 if I live to be about 78 (made up numbers).  I guess you'd also need to account for the inflation adjustment too--although you can't account for lower benefit laws and tax changes.

Asking bc I don't hear a lot about this strategy--maybe it's dumb.  I hear about the reduction vs. the monthly benefits you aren't getting but I don't hear about the investment value of having that money early (I guess bc ppl assume you would blow it rather than invest it).  Does this make any sense?

braje

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Re: Getting SSA early, invest, then pay back without penalty?
« Reply #1 on: August 05, 2019, 11:47:04 AM »
According to  https://www.thebalance.com/social-security-buy-back-makes-sense-in-some-scenarios-2388921
If you file for Social Security then change your mind about receiving benefits just yet, you can withdraw your application up to 12 months after the time you filed for benefits. But there's a catch. You must pay back any benefits you received in the interim, as well as any benefits your child or spouse received based on your earnings record.

DeniseNJ

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Re: Getting SSA early, invest, then pay back without penalty?
« Reply #2 on: August 05, 2019, 01:09:06 PM »
According to  https://www.thebalance.com/social-security-buy-back-makes-sense-in-some-scenarios-2388921
If you file for Social Security then change your mind about receiving benefits just yet, you can withdraw your application up to 12 months after the time you filed for benefits. But there's a catch. You must pay back any benefits you received in the interim, as well as any benefits your child or spouse received based on your earnings record.

Ah, that's a monkey wrench.  But it seems like it may still be worth doing. And it seems you can suspend benefits before age 70. I guess you could collect until a certain time/amount and suspend so your benefits are higher.  Trying to think of whether it would be an advantage. https://www.ssa.gov/planners/retire/suspend.html