“SSA-521: How to Boost Your Social Security Payments By $1,033 Per Month.”

By Travis Johnson, Stock Gumshoe, October 14, 2008

This is actually an odd little teaser that a few readers sent in to me recently — including one who offered a solution that is actually correct (forgot to ask for permission, so I won’t mention the name). Smart readers here, as always.

What we get here, in exchange for subscribing to Steve Sjuggerud’s True Wealth, is an explanation of how you can use “Form SSA-521” to increase your Social Security checks. The teaser says that “every retiree should read this” … and there’s some truth to it, certainly. Though you don’t need to subscribe to anyone’s newsletter just to find out what it is.

I won’t go into great detail on this one — it’s not super sneaky as so many of these teasers are. There is, for example, actually a form number 521 involved, they didn’t just make it up.

What the teaser tells us is that many people can raise your social security payments, and that very few people did so last year, and that even most Social Security Administration employees have never heard of it before. It essentially is a way to restart your Social Security clock — if you have applied for Social Security you know that your payments are much higher if you wait a few years than if you take the payments as soon as you become eligible.

Essentially what’s being teased here is a way to double dip at the government soup tureen.

Anyone who has applied for Social Security can also place a request to withdraw their application. If you applied five years ago and started receiving checks when you were 62, for example, you could file form SSA-521 to request a withdrawal of your application, and then after that’s processed you could apply for Social Security again, this time at the much higher payments you would receive as the 67 year old that you now are.

So what’s the catch? Well, you have to repay any money you received. Which stands to reason, if you’re withdrawing your application five years after the fact you have to pay back those 5 years of Social Security checks.

Why do it? It’s essentially an interest-free loan. As I understand it, you don’t have to pay interest on those five years of payments you’ve received from Social Security, you just have to pay back whatever you’ve received.

Other than that, it’s essentially an actuarial question — how long are you going to live, and how long would you have to live to make it worth it to restart the clock? The payments for someone five or ten years older than the minimum Social Security age can be dramatically higher, so for many folks it will probably be a genuinely good thing to do.

Any other catch? Well, the reason not many folks have done this in the past is that the process for withdrawal of a Social Security application looks like it was generally designed to correct errors, and probably the few hundred folks who did this last year did so because they messed up their application, or didn’t understand the graduated payout schedule and later realized that they didn’t really need to apply yet after all and might as well wait for larger checks.

The wide publication of this idea happened just earlier this year — Laurence Kotlikoff, a Boston University economist, was the one who is credited with bringing this to everyone’s attention. He published his info earlier this year, and it got a fair amount of attention from financial planners and the money media.

So … should you do this? I have no idea, it would probably be worth reading up on it, and talking with your financial adviser, but from the articles I’ve seen it certainly is worth researching if you took Social Security early and you’ve got the money to pay it back, perhaps especially if you are optimistic about your life expectancy from this point.

The bigger question for some folks who are a bit younger, near the time when they can apply for Social Security, is whether you should take early Social Security even if you don’t need it, with the intention of using it as an interest-free loan and withdrawing your application and repaying it in a few years. In my opinion that’s an ethical question as well as a political and financial one — the fact that this is a very new thing for the Social Security Administration means that they may well change the rules to counteract this loophole.

And when you do file SSA-521, you do have to give a reason for requesting your withdrawal, whether you’re going back to work or something else. I have no idea whether they care what these reasons are, or if they ever reject these applications for withdrawal, or will do so in the future.

Certainly there was no intent for Social Security to offer interest-free loans to retirees, so I wouldn’t be surprised to see them clamp down on this eventually. I have no idea what impact that might have on folks who tried to game the system by taking Social Security payments early with the intention of paying them back, but it’s something to think about — I would consider this a loophole, so it would not be surprising if they didn’t make any provisions to “grandfather in” folks who tried to exercise this loophole. My perspective could certainly be very wrong, I’m no expert on Social Security, nor am I a financial planner, this is just my opinion.

Here’s a start for you if you want to read up:

The explanation from the Social Security Handbook is that yes, you can replay your benefits and withdraw your claim, click here to see their formal explanation — it’s 1515.2. The actual form is really called SSA-521, you can download the pdf here if you like.

There’s a very brief explanation of what it is in a story from Marketplace (the NPR show).

There’s an article from Investment Advisor magazine that explains how this works.

And if you want to see ground zero of this, here’s an explanation of the numbers from Dr. Kotlikoff, the economist who brought this to the attention of a lot of folks and is quoted or cited in most of those stories. His case study includes a chart that gives you some idea of how this might impact an individual as you begin to understand whether this is a worthwhile thing to do.

If anyone out there in Gumshoe land has done this, or looked into it, feel free to share your experiences or opinions. It’s real, but I’d make sure to run your numbers through the scenarios — you can probably skip Steve Sjuggerud and go straight to whoever you trust for your financial planning advice if you don’t like digging in to the data and the government forms by yourself.


There are only a few days left in our Charitable Membership drive -- Help Stock Gumshoe, help a great cause! If you've ever thought about joining us, now is a great time... just click here for the details.

 


Share your thoughts...

93 Comments on "“SSA-521: How to Boost Your Social Security Payments By $1,033 Per Month.”"

Notify of
avatar

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Massey
Guest
0

I got Sjuggerud’s email and checked out SSA-521. I immediately saw the catch.
I’ve been collecting S/S for exactly 5 years, since I turned 62. I’d have to pay back $84,000 to collect about an extra 5 or 6 hundred bucks a month.
No thanks.

Add a Topic
372
Jeff
Guest
0
According to the SS website, you can’t file an SSA-521 if you’ve been collecting longer than one year. I started receiving payments at age 62, last year. Payments are $839/mo. If I paid back the 11 payments I will have collected ($10,068) by the end of the year, my payments would rise to $886/mo, an increase of $47/mo or $564/yr. It would take 17.85 years to recover the amount I would have to give back. That would be pretty stupid–especially considering that if I invest that $10,068 at 3% for 17.85 years, it will grow to $16,641, which is $6573… Read more »
EYOUNG
Guest
0

I wonder how this works, if a person is on Disability Retirement??? Would THAT have to be paid back? OMGawsh~!

Add a Topic
1209
Reality Man
Guest
0

The real point, that no one seems to get, is that if you delay taking payments from Social Security you are making a loan to the government at a very low rate. Only those who place a very low value on money would consider doing such a thing. It is very easy to construct a spreadsheet to play around with the variables of expected years of life past 62, estimated payments at 62, 66, and 70, and rate of return–the scenarios tend to show a higher present value for starting payments at 62, never mind SSA-521.

Add a Topic
979
MKoss
Guest
0

To: Massey,

Yes you would have to pay back the $84,000.00. In return you get an immediate annuity that would be paying about 7.5% that is indexed for inflation. Obviously if don’t have the cash it is not relevant. But if you have the money sitting in a CD or other liquid instrument where else are you going to get that kind of deal

Add a Topic
372
Add a Topic
717
MKoss
Guest
0

One other thing if you are married and in good financial shape then you have a dual life expectancy to bank on in order to make it worthwhile

F Brewin
Guest
0
Actually your daughter can collect social security on your record until she graduates from high school even if she is 19. The money for her is to be used for her upkeep. There is nothing saying you must invest it for her college years. That being said, colleges consider a bigger portion of money in her name should go toward her education bills than your funds because you have household bills and she doesn’t. Plus at your age and if you’re retired they figure you need more of your income to fund your later years. Take note that they do… Read more »
Add a Topic
979
Add a Topic
996
Add a Topic
1209
Lastmate
Guest
0
I wonder whether the payback amt would also include additional social security payments for a minor child? We adopted a child from foster care 4 yrs ago who will only be 14 yrs old when I turn 62. She will be eligible for payments in the amt of 50% of my benefit, from the time I first start my social security, till she turns 18. For that reason, I’ve been thinking I should take the lower benefit payable to me at 62 rather than waiting till my “full retirement age” of 66, since she’ll be almost 18 then and would… Read more »
Add a Topic
979
Add a Topic
979
Add a Topic
1209
Wayne
Guest
0
Real world experience: (Ref: AARP) Most of the people on SS start at 62 because they desperately need the money. Paying back is not an option. The majority of the rest have not done fancy financial things with their money and paying back is in fact not possible. I waited for “Full Retirement” age so that I would not have the huge penalty tagging along for the rest of my life. Then, although I was still working, I started the SS and that is the money I put into the Market. When I was forced to retire suddenly, a long… Read more »
Add a Topic
1209
Add a Topic
5023
Add a Topic
372
gmcg
Guest
0
Before I turned 65, having planned to continue working, I did a spread sheet using SS estimates for factoring whether to start drawing SS or wait until I actually retired. I found that I would receive more money (over the course of an estimated life span) by waiting but it would be a gamble as to my life span. I chose to start SS payments at 65 and then was able to max out contributions to my 401k for 4 years. I retired at 69 with a bigger nest-egg than if I had waited until 69 to start SS payments.… Read more »
Add a Topic
996
Cool Soupy
Guest
0

Don’t forget that you have to(I have) have paid taxes on the S.S. checks so you are paying back 100+%?

VAL
Guest
0

Gummi: If you have been getting social security some of that was taxed for many people since Clinton introduced the ss tax. What of the taxes you paid and do you get any kind of tax rebate on the $84,000 you return to soc sec?
The other question had to do with logevity. I had parents who lived to avg 90 and I try to stay in good shape. The computation I did shows me coming out ahead after I reach 77 or 78.

Add a Topic
979
Gravity Switch
Admin
12
I have no idea what that tax implications are, good or bad. I bet they’re complicated, though! And yes, as with all this kind of stuff — Annuities, Social Security, all the other decisions you typically make at some point in your 60s, a major key is your longevity — the one thing you probably can’t control, or even understand very well. As with every other really important question, the statistics mean almost nothing once you get down to the individual level, but they’re the best we got. Imagine, for example, that you hear that 1% of people have a… Read more »
Add a Topic
2746
Add a Topic
2746
Add a Topic
979
john sloan
Guest
0
HI all Agree with many comments so far- I started SS at age 62 and invested it – minus the tax I had to pay. Am still investing it at age 75 and yes paying taxes on it. Plus my wife started getting spousal SS at her age 65. We don’t use any of the SS income for expenses – Sure I could give a lot back and immediately start getting more each month – But the amount required to give back is money we HAVE and will will to someone – but if we gave it back there is… Read more »
Add a Topic
372
Add a Topic
996
Add a Topic
372
bob zimmerman
Guest
0
The SS decision can be looked at in the same vein as taking money from an IRA. Most people put off making withdrawals from IRA accounts until the IRS says the gotta. These people are the same ones who ignore taking out insurance for long term care, because it is too expensive, or it will only happen to the other guy. If you take social security at 62, there is no law that says you cannot use it to dollar cost average into the mutual fund of your choice. Doing so adds to the net worth that you control, and… Read more »
Add a Topic
882
Add a Topic
979
Add a Topic
996
Ron Cossey
Guest
0

No need to do a spreadsheet to determine whether to take early SS.
Use the one the government provides at
http://www.ssa.gov/oact/quickcalc/when2retire.html

Ron Cossey
Guest
0

Sorry about the wrong address, use http://www.ssa.gov/oact/quickcalc

Dusty
Guest
0
The information published by the Social Security Administration says that a person who begins payments at 62 will have a higher total cash amount than if (he) had waited until ‘full’ retirement age with the understanding that the larger payment started later (without penalties) will reach the break-even point in about seven years. Beyond that the “Full Retirement Age” option will generate an increasingly higher total cash benefit. Life expectancy is dealt with often in published discussions about Social Security, as in a publication by AARP, for example. One member of a marriage is very likely to reach or exceed… Read more »
Add a Topic
979
Add a Topic
1340
Add a Topic
1209
Ron Carnel
Guest
0

A close friend waited to recv his ss income – wanting his full benefit- expired before recvng a single dime. This puppy will start the day he is eligible, God willing. I would rather mow lawns than die b-4 66 and get nothing back.

Add a Topic
996
Matt Fox
Guest
0

the biggest problem is determmining what you received. unless you kept all your tax returns for the years in question there is no place you can go to for that number. SSA does not offer any information on past payments (I’ve tried and gotten nowhere).

farley 5
Guest
0
This comes from the cynic in me not the CFP part – Take the bene as soon as you can. The Social Security system is a mess. With all of this credit crunch joy, there will be no money for SS since it is a pay as you go system. I believe we have no choice but to raise the age where you are able to take benefits. I also believe it will be means tested. That is – the fine folks on this Website that maxed out their 401(k)’s, IRA’s, Roth, etc, will not get SS benefits. How is… Read more »
Add a Topic
979
Add a Topic
372
Bob Blick
Guest
0

Thinking about this, I don’t know if it’s a good idea or not. Everyone will need to make up their own minds based on their situation however –

I don’t see why the government would want to close this loophole. If people started taking advantage of this, social security would get a financial boost and, in effect, people would be giving them the money for their own benefits for the next – maybe – 4 years.

Add a Topic
979
Randy
Guest
0

What about if I want to make payments to SS for my wife who doesn’t work in order to increase her pathetically small SSI check when she reaches 67? That’s what I need to know. She’s going to get a paltry $400 or so. If I just send in money to cover what she would be paying in to the system if she worked, can I do this?

terry
Guest
0

When you turn FRA (full retirement age) or even take it early, if you have been married at least 10 years your wife will be entitled to 1/2 of your benefit + you continue to receive your full benefits from SS. I was in a similar situation, so I did just that a few months ago. It rose my wife’s benefit from roughly $700/month to $1,230/month, and it does not affect your benefit at all. Look into it, lots of info on it on the web and at Social Security. Trust me this is fact! Good luck.
T

Add a Topic
1209
Add a Topic
979
larry bernstein
Guest
0

this is a question.i took my ss at age 62/1/2 and have collected for 1 yr.if i return the money now will i be able to then collect the amount i would have received if i waited until age 66?if yes when would i start receiving the higher amount?

Elizabeth Calton
Guest
0

Why doesn’t someone address the problem about the government using the social security, without reservation ,for things not intended. I think it would have plenty of money for years and years had they been barred from using it.
I also think they should be made to repay what they took out,with interest, which would help to rebuild it.

Add a Topic
979
Donna Ryerson
Guest
0
I just started receiving Social Security Disability and was contacted by Social Security Income, (SSI). As it turned out, I did not qualify for SSI, (my income was too high between Workmens’ comp and private disability) at the time. I was told by the SSI rep that I had quite the substanial retroactive amount waiting for me but, I could not receive it until I completed Form-521 and returned it. My confusion lies here, if I turn in completed Form-521, will this also effect my Social Security Disability income? Or just my SSI income? Thank you.
Add a Topic
979
Add a Topic
979
Add a Topic
996
Rene Gonzales
Guest
0

In order to make this strategy work you would have to be able accurately to predict your year of death. Do you know anyone with this ability?

Vidar Warness
Guest
0

Your headline says: “Boost your payment by $1033/pr month. How do you arrive at that/which SSI rule would apply? Thank you, vw

Steve Bell
Guest
0
Asset deflation and currency inflation will take care of SS. The government will show inflation at 2% thru asset deflation and then pay you with currency inflated at 18% as the boomers retire en mass starting in 2 years. Your $1,500 per month SS payment might end up buying you gas for your car, as long as you don’t drive very far. Especially at $20 per gallon for gas, which won’t be part of core inflation. You can use your $1,000 a month annuity to buy cereal, milk, crackers and to splurge on the occasional can of dog food. See… Read more »
Add a Topic
5400
Add a Topic
717
Add a Topic
717
Monnie
Guest
0

Gumshoe,

Do you know anything about The Mining Speculator’s “Doubling Your Gold Profits”? I think the gold price is going to increase substantially this year, and I’d surely be interested in a way to double up on that.

Add a Topic
210
Add a Topic
210
SoYouThinkYouCanInvest
Guest
0
I have subscribed to the free Daily Wealth newsletter for a few years now. I have noticed a disturbing tendency by Dr. Sjuggerud to market high risk investments as low risk. If they work out, he loves to flaunt the numbers. If they crash and burn, you will not hear a peep. The best example is what happened in Iceland. Daily Wealth had dozens of articles that were pushing Icelandic government bonds in 2005-2007. When it all blew up last year, not a word about it in Daily Wealth. I have documented everything in a new article on my site… Read more »
Add a Topic
3511
Add a Topic
3511
Add a Topic
718
mike
Guest
0

No Brainer if u can afford it. Put the check in a low risk high yield stock or money market…wait 5 years, pay back the principal keep the interest , and start collecting bigger checks….BUT alot of people can’t afford to do that

Add a Topic
4635
Add a Topic
5971
Add a Topic
372
PoorOldJim
Guest
0

Between my wife and I, that would amount to a heck of a lot more coin than we could muster. And at the rate my health stats are going, Uncle Sam would cash in. And at the rate our Pres is spending money, I wouldn’t feel too comfy that what we are getting might take a bite somewhere down the line. Sjuggerud, stop beating this one to death. There may be one out of 100 who could [or would] do this.

trading
Guest
0

Nice site! thanks for the great post…%d%a%d%aPeople should read this.

cash back real estate
Guest
0

How are we going to afford Social Security and Medicare over the next 10+ years?

Add a Topic
979
stockcrazy10
Guest
0

We won’t. There will be significant cuts.

John Klem
Guest
0
Having read the previous 64 comments covering National Retirement and the National Health Care System (for us old guys)Is it really possible for OBAMA to lead us into a National Health Care for everyone? The employee and the employer contibution to Social inSecurity has been/is between 13% and 15%. After “contributing” since 1964 my social insecurity benefit is $1680. At age thirty three I went to work for an employer that deducted 6% of my gross pay matched it with an additional 6% and after 29 years and 6 months with that employer(start date May 1, 1979), I can withdraw… Read more »
Add a Topic
1209
Add a Topic
372
Add a Topic
1340
ward Hogggen
Guest
0

can you comment on the Congressional Mandate HR-3221 and the 17,500 yr free income?
ward hoggen

Add a Topic
996
Goldbug
Guest
0

I would take any interest free money, invest it in a CD then withdraw and reapply for higher payment and repay the 5 years with the principle and keep the interest earned on the 5 years of money you got from 62 to 67.

Curious
Guest
0

Maybe this has been answered, but I don’t see a posting.
I’ve been collecting SS since 65 and am still working at 69. I get a cost of living increase, but I’m curious as to how my SS is calculated with the additional SS that I’m still paying. I’ve inquired with SS but have not received an answer that I really understand.

rasl1
Guest
0
Besides the 25% hit to taking benefits at 62 and having to repay all payments; the real risk is knowing how long U'll live if U pay-back and re-calibrate at say, age 65 ! Let's say u have the money at 65 and U've been taking payments since age 62. Let's say U re-pay a lump sum of $36,000 at 65; and take a higher payout from that point on. If U die 12 months later at say 1,500/mth; U on;ly got back half the money U re-paid ($18,000) so U lost $18,000 !) I parobably takes 2-3 years of… Read more »
Jim Sullivan
Guest
0

I see it as you have payed taxes on the benefits before recieving, thanks to My Al Core and you have again paid taxes as it added to your income on state forms and federal 1099 year end and if you send money back and wait a month to recieve higher SS benefit, then you have lost that months money altogether. If everything went perfect it will take you until age 77 or 78 to ever make the extra money in SS benefits count for anything! This looks like a loose, loose situation all the way around

Add a Topic
996
Gwen
Guest
0
I'm so glad I stopped by,I've been diabled for years, but Ive resisted applying for SS because I thought I could overcome my health problems.We've gotten by on my husbands income so far… Now that dialisis (SP) is looming on top of my previouse problems I've decided it's not fair to my husband to continue to shoulder it all. I watched the video because of the SS report, But after reading the posts here it kinda leaves a bad taste ,even if we could afford to save it up and pay it back in five years. It may well be… Read more »
Add a Topic
996
Add a Topic
372
Bigg Fredd
Guest
0

If you qualify for SSI/SSD, get it. You paid for it.

Rumor has it they plan on eliminating that loophole.

WalterA
Guest
0

My comment was in response to John J. Werst from March 10, 2009

az_jack
Guest
0
I am a scientist and worked at a university. I was deeply involved in my research and teaching and never paid much attention to retirement information, even as I approached retirement age. I had decided that since there was no age for forced retirement, and I enjoy teaching and especially research, I would work until I died and never retire. Then one day I decided to check and find out how much my pension and social security would pay if I did retire. I discovered it would pay just a tad more than my current salary. I had never considered… Read more »
Add a Topic
1209
Add a Topic
1209
Add a Topic
1209
Jim
Guest
0

The breakeven point is about 80 years old regardless .

A.M. Deist
Guest
0

Try 88 years, and maybe even longer because like military retirements many retirees get annual increases that might not be the same as those retiring later.

Stacia
Guest
0

Very nice post. I certainly love this website. Keep it up!

SA Williams
Guest
0

I found this page while searching to see if I could find out what was being hyped in a recent e-mail I got from the Palm Beach Research Group. Do you think this is the same ‘Secret’ way to boost Social Security featured in this product from the Palm Beach guys?

https://order.palmbeachgroup.com/1512PBLSS/LPBLRCC6/index.htm?pageNumber=2&h=true&_ga=1.64375788.2120626402.1446657992

or could the Palm Beach article relate to one of these three strategies going away in April?

http://money.usnews.com/money/retirement/articles/2015/12/04/say-goodbye-to-the-social-security-file-and-suspend-strategy

Thanks.

Add a Topic
370
Add a Topic
979
Add a Topic
370
amdeist1
Member
6
The reason why smart Americans take Social Security at age 62 is because the break even for waiting until 65 or after is around 88 years of age. Furthermore, if one spouse has a significantly larger Social Security benefit, then the spouse with the loser income gets a raise and the break even age increases. In my case, the break even is 92, and if either one of us passes before age 92, then waiting to take Social Security wouldn’t make economic sense. Anyone who has the amount they have drawn to pay back so they can draw a larger… Read more »
Add a Topic
979
Add a Topic
979
Add a Topic
996
A.M. Deist
Guest
0
For those concerned about Social Security going away, rest assured it is not. Even if they change nothing, social security will be able to pay out about 3/4 of the scheduled benefits. Two things that can fix the system would be to eliminate the fraud, waste and abuse of the system and bring jobs back to the United States so we have more than the 2.9 workers paying into the system for every retiree. The Congressional Budget Office, in a separate report that uses somewhat different demographic assumptions, projects that the disability fund will be exhausted in fiscal 2017 and… Read more »
Add a Topic
979
Add a Topic
979
Add a Topic
372