No More Social Security "Do Over' Rule
The Social Security Administration has ended the “do-over”
provision.
The rule enabled people whose circumstances had changed --
they found a new job or inherited money -- to stop receiving their Social
Security retirement benefits. In return,
they would receive higher monthly checks when they did retire.
The do-over required repaying benefits in a lump sum with no
penalty or interest. In extreme cases, delaying benefits from the early
retirement age of 62 to 70, the retiree’s monthly check would be twice as large
counting inflation adjustments. Over a lifetime the difference could total
hundreds of thousands of dollars if the retiree and spouse live into their 80s.
Only a tiny fraction of the 50 million Social Security
recipients used the do-over clause. But there were rising concerns of potential abuse of the
rule. The financial press had emphasized the possibility of an “interest-free
loan.”
The rule change highlights the importance of carefully
analyzing Social Security options before signing up for benefits. For nearly
two-thirds of Americans, Social Security is their largest or second largest
asset in retirement. Getting it right can make the difference in the financial
security they enjoy in retirement.