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

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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.

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

  1. 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.


    • 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 better than sending it back to the government.


  2. 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.


  3. 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


  4. 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


    • 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 not consider IRA savings, 401 retirement accounts or life insurance. Therefore it pays to use the 50% Soc. Sec. benefit from your record for her needs while she is still in high school. After all that’s why she qualifies for it. The whole idea is you’re retired and bringing in a lot less money to support her.


  5. 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 be eligible for the 50% benefit (even if it’s 50% of a higher amount)for only a few months. I believe the minor child benefit would be payable directly to her, though, so wonder whether it would have to be repaid with SSA 521 along with the benefits received in my own name since age 62? That extra $ and the timing of it from age 14-18 would sure help toward funding her college tuition, especially with my husband’s and my overall income being significantly reduced in retirement. I’m also curious about whether and how a social security benefit, particularly one paid in her name, could potentially affect her eligibility for need-based financial aid for college. Even if she’s drawing 50% of my social security benefit amt, it would end when she turns 18 (when she’ll she’s only a few months into her senior yr of h.s.), so she wouldn’t be getting that income when she’s in college, but would still be getting it during the timeframe when she’d have to start applying for college admission and financial aid….so would it “count” in financial aid formulas? Would appreciate input on this (and the social security question) from anyone who’s knowledgable about it. Thanks!


  6. 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 time before I had expected (in my case from illness related to aging) there was experience with the Market and a functioning investment process. That is in addition to and separate from the 401K. The result is a ready source of cash if needed and confidence in what to do with Mandatory Distributions from the 401K.

    Now that I am using the SS to pay for daily needs I am very happy that I am receiving the full amount. Meanwhile, high-dividend investments provide a trickle of additional money to help with daily needs. Unused money, if any, is reinvested as a hedge against inflation.


  7. 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. The income tax on 85% of SS payments while continuing to work was offset by 401k contributions. One’s life span is an unknown so this seemed the appropriate plan for me.


  8. 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.


  9. 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 deathly allergic reaction to chocolate that comes on suddenly and without warning (just making this up, of course). That means nothing — what’s 1%? No worries! At least, it means nothing until you realize that you’re hosting a party for 100 people and serving chocolate cake — is one of your guests going to die?

    Knowing that you’ll “probably” live to 85 is not that comforting if you think that you might “win” and live to 100 and be vital and energetic … and homeless, and broke. Actuarial tables are great for planning, and great for populations — for individuals, they’re sometimes less comforting.

    Again, I’m not a planner and I’m certainly not qualified to provide retirement or tax advice, just sharing my thoughts.


  10. 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 no likelihood we would ever get that much back over remaining life and for sure we would not have that sum to will to anyone. We would simply pay a lot more income taxes on the increased monthly SS payment also. We have certainly gained more from the years of investment also. This is just another one of the Sjuggerand doubtful schemes.
    best wishes


  11. 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 can leave to your estate if you do not use it later for income. How much of your social security check will your heirs receive?

    Regarding IRA withdrawals, take them as soon as you are eligible. Pay the taxes on them at todays’ tax rates and use the income either for protecting against deteriorating health or to set up an investment account that will not be eroded by increased income taxes in the future.


  12. 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 ninety, barring specific kinds of health problems like heart diseases or cancer where those problems existed well prior to reaching SS retirement age. A person who is healthy at 60 will probably reach 85 or more. As mentioned by Gumshoe, one person is always a wild card. Statistics only work with large populations.


  13. 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.


  14. 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).


  15. 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 that for a redistribution of wealth?

    I just hope SS lasts for 5 more years when I turn 62.


  16. 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.


  17. 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?


  18. 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?


  19. 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.


  20. 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.


  21. 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?


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


  23. 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 how easily problems can be solved.


  24. 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.


  25. 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 – check it out: http://soyouthinkyoucaninvest.blogspot.com/2009/03/beware-of-false-prophets.html.


  26. 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


  27. 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.


  28. 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 a cash payment of $800,000+ or a maximum monthly payment of $6530. for my lifetime plus a one time payment of $29,000.

    When I started working and found out about the 6% deduction (a condition of employment) I was upset!!!! I figured that the 12% total contibution caused a 12% reduction in wages from day one. And it did! But I am very happy now. Happy that my employer provided the program. Happy that my employer was obviously a better money manager than the Feds. Happy that I don’t have to rely on social insecurity.

    I am disappointed that 13-15% deducted for 45 years is so little compared to a 12% deduction for 29 years six months.

    Take your social insecurity as soon as possible. As history shows, it can be taxed, it can be decreased, elgibility can be changed; with the stroke of a pen the benefits can be cut.

    Take the money and buy HTS, NLY or something good. the IRA is into HTS at 21.50 and pays $1.00-1.05 per quarter (4.8% per 1/4).

    $84,000.(the cost of SS payback mentioned in other comments) worth of HTS at current price would pay 3300. per 1/4. $13,200. per year, $11000.+ after taxes.

    I am not lucky-I am blessed!


  29. 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.


  30. 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.


  31. 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 living longer to beat the risk of re-payment and starting a higher payout at later ages


  32. 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


  33. 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 legal (for the moment)but hardly seems right if I am understanding it correctly.
    Thanks a million,glad I researched it a little


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

    Rumor has it they plan on eliminating that loophole.


  35. 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 applying to take SS payments at 62 or 65 because I naively thought that you could not get SS until you retired. So at age 75 I decided to retire. At the local SS office they told me I could get retroactive payments only for the preceding 2 years, but my payments would be higher than if I had taken them at 65 (but I missed all those payments I could have had between ages 65 and 73. Now I am 83 and I certainly cannot afford to pay back all the payments I have received, so this Form 531 is not of any use to me. I have been living from paycheck to paycheck (pension + SS) making some investments along the way. As inflation continues to get worse, I hope the slight annual increase in the amount paid to me does not get cut, but I am concerned it will. I am considering a possible move to Panama, where it is easy to become a resident (not a citizen) if you are getting a pension, cost of living is much less, and pensioners (whether Panamanian or foreign) receive all manner of discounts, and their economy is much better than ours, as is medical care.


  36. 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?


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




  37. Yep, it’s a big nut — the current max payout for a 62 year old retiring today is between $1300-1400, I think, and if you were 67 and retired today it would be just over $2,000. So those same numbers would apply today, or close to it. If you’ve gone five years and would have to pay back 84,000 you’d have to stay with this mortal coil for at least another ten or twelve years to have it be worthwhile, just going by the arithmetic (without counting any income you might have made on that $84,000). Some folks might find it worthwhile, but it’s certainly not a “no brainer,” even if the life expectancy for a healthy 67 year old is much longer than that.


  38. Not only that – you have paid income tax on the SS payments that you have received so far and then you would pay again on the increased benefit checks?


  39. It won’t be worthwhile paying back the $84000. If you have the amount, you could invest it and at 7% yearly earnings, you could withdraw $500 monthly from it forever. And when you die, your lucky heirs would get the $84K principal. If earnings was only 5% annually, it will take more than 20 years for it to be depleted at $500 monthly withdrawal.


  40. i had plan to get sjuggerud newsletter.Id like to know is it worth it?? And could you (or any) one please FWD me the Email or “REPORT” he sent you?


  41. Disability payments do any apply to this. You are getting your retirement benefits early. If you are still disabled at your retirement age, nothing will change for you and you will get the same amount you were getting except it will be from the SS retirement account instead of the SS disability account the government has.


  42. Yes, SSA benefits are adjusted with the government’s self-serving Consumer Price Index, which is contrived to be well under the actual rate of fiduciary money creation. At present I think the ‘official’ CPI is 1/7 of the actual rate. (Fiduciary money is entirely based on the trust of the public. It has no real backing. When public trust is lost, so is the value of all ephemeral monies lost.)


  43. I thought SS benefits were for children of a deceased person and have never heard of 50% for a child when the person is living. Is it something in the adoption of a child in foster care that changes it?

    You would be wise to call SS and ask the questions so you will know for sure.


  44. I was required to retire at age 60 when my son was 15. I began taking my Social Security payments at 62, and my son received payments until he reached his 18th birthday.

    I heard about the option to repay benefits some time ago, and I inquired about this at my local SS office. The lady I spoke with informed me that I would have to repay the benefits that my son received as well as those that I had received.

    I decided not to do it.


  45. I’m thinking the same thing; plus two subpoints: one, amended returns perhaps could get refund for past 3 years, although present value?; two, it could be favorable to retax in future years if one will be in a lower taxable income situation, thus the replacement tax is lower.


  46. I believe that this is the correct way of looking at this investment. All of the other considerations or concerns shouldn’t matter, except for MKoss followon comment.


  47. Peace be with you, We’re now in the midst of campaigns for this and that political positions. The Dems. and Reps. are talking CHANGE as part of their position. Have them stop all taxation of Social Security funds. Why? We have already paid income taxes on our accumulated pool of funds. The government is supposed to invest it. The government keeps, and exploits, most of the profits, when invested wisely. Then we are to pay an additional income tax on funds that we have already paid income taxes on? Or is it paid on a percentage above what they calculate our life expectancy to be – it used to be 100 when I sold insurance for New York Life – and the amount that we are to withdraw?


  48. I believe the government will refund any taxes paid on previous social security payments.
    However, those with higher incomes must consider that in almost every country, social security payments are means tested – if a future government decided that say, anyone earning over 100,000 is not entitled to social security payments, anyone who did this conversion with this income might be out of luck!


  49. The SSA calculators are simple-minded compared to one that is able to evaluate the present value of multiple scenarios of life expectancy, choice of retirement age, and discount rate.


  50. The next couple elections will probably tell the story of Social Security’s future — remember, the baby boomers and the already-retired generations are the ones who vote in large numbers. If that changes and younger people start thinking about this and voting, change could come surprisingly fast. If not, we’ll just keep pushing the age back for future generations, and probably means-testing. Either way, I very much doubt that the folks of your age and older will see any big change at all — young people may start to participate politically, but they’re not going to squeeze out the boomers. I would even be surprised if means testing got in for current or near-future recipients, though it’s certainly possible.

    Clearly we need to reform social security in some way, anyway — it was intended as an insurance program to ensure the elderly didn’t sink into poverty, and came into wide use at a time when most workers had private pensions and families implicitly expected to care for each other if they could.

    At the time it was introduced the age of retirement for Social Security was greater than the average life expectancy for a child born that year, and in the early 1960s they even lowered the retirement age. Clearly even if there weren’t generational changes that caused the pay as you go system to get out of whack, there would probably be the need for significant changes either on the payroll taxes or the benefits.

    Social Security won’t take the brunt, though, I don’t imagine — they can just keep pushing the age back every few years, or perhaps means test it, it’s basically a solvable actuarial problem — assuming that the population continues to grow through birth and through immigration. Medicare/Medicaid will be the real fiscal problem, God knows how that one will get fixed.


  51. True, for every individual it may or may not be a good idea — but on average, from my napkin-drawing perspective it’s much better for Social Security recipients than for the government. Forgetting anything about taxes or medicare or other complexities that don’t fit on the napkin, if it takes a 67 year old six or seven years to break even by repaying their benefits to reset the clock, the government loses — a 67 year old man is expected to live about 15 years, a woman a little longer. It would be a short term boon to Social Security if people repay, but a long term problem — not to say the government wouldn’t like that, it does mesh with the short term focus that voters have insisted our leaders take.


  52. Then in my case, if I’d started benefits at 62 when my daughter’s only 14, I’d have 4 yrs of HER benefits to repay, along with my 4 yrs of benefits from age 62-66. She’ll turn 18 just 3 months after I turn, so although my benefit would be higher, she’d receive a benefit for only 3 months vs. 4 yrs! Definitely not worth doing the payback option! I HAVE heard, however, that I could apply for a benefit at 62 but defer receiving mine till later, if I want to hold out for the higher benefit amt., but an underage dependent (or even a spouse filing for benefits under his/her spouse’s work record) can still start receiving his/her applicable benefit amount when the main applicant turns 62 (based on applicable % of the amt they’d get if they start drawing it at 62) even if the main applicant defers theirs. Thus I presume my daughter could receive the 50% of my age-62 benefit for 4 yrs, till she turns 18, and as long as I’d applied then but elected to defer my own benefit, I’d have nothing to pay back and would start receiving my own higher, age-based benefit whenever I specified (age 66 or whatever). It’s pretty complicated and frankly alot of the employees in local social security offices aren’t very familiar with these atypical variations. I do have a cousin who retired from the social security admin in D.C., running educational seminars for their employees. Maybe I should ask her!
    The dependent benefit is for under-18 children (whether by birth or adoption–foster care background unnecessary) whether you die OR retire, but few retirees age 62+ still have minor children.


  53. I turn 64 this October 09. My two children are 15 and 17. I am working and plan on continuing and starting my own SS at 66 while working full time. Are suggesting that my 2 kids can now begin collecting eventhough I am not. Would they get 50% each of what I would be getting at 64. Very interesting !! thanks, Bill


  54. Tho I am not positive, I believe there is a provision in this procedure that allows you to get back ALL of the tax you have paid on your SS receipts.


  55. I can’t answer your specific question, but my understanding is that you can just “reset the clock” — take back your initial application for social security, pay back that money, and then reapply whenever you want to to get the then-higher payment.


  56. It's easy to predict with accuracy, but why would anyone choose to limit how long they live unless they are severely depressed?


  57. I took that number straight from the teaser ad, so I’m not sure where they get it. I assume that, if their past tendencies hold true, this is probably the difference between the minimum payout, and the maximum payouts that you could get if you had postponed Social Security as long as possible.


  58. Actually, it was Ronald Reagan & Tip O’Neill who made the Devil’s Pact to tax Social Security benefits, to “assure the future of SS”, & to let Congress spend payroll taxes dedicated to the SS Trust Fund as if federal income.
    Bill Clinton, Alan Greenspan, Boskin, et al, did cook the books on COLA’s in about 1998-99. See Kevin Phillips book “Bad Money” for more horrors of govt lies & deceit.


  59. When wife & I reached about age 55, SSA started sending an annual statement of all years of wages, SS taxes, and medicare taxes paid into the system.
    The notice says you can request a “Record of Earnings”.
    I started SS at age 62 & am now 64.
    So, SS has been like unemployment insurance and a Godsend, after 14 years of low wage temp jobs, & mostly unemployment, building super garden & house painting, fixing old cars (never had a new one in 40 years), clothes shopping at Thrift Town, Goodwill, & Salvation Army “thrift” stores.
    SS is less than minimum wage, but taxed at marginal rate 15% if your wife has even a small teacher’s retirement income (after 40 years!) plus SS.
    The recession of 1993 hurt a lot of people who never regained full employment, so SS is very welcome. (We’ve lived through about 2 recessions per decade since the 50’s, unofficial & “official govt economist declared”,
    plus the Austin & Midland housing market meltdowns & rebounds.)
    No company will hire a 48-year-old programmer/analyst when there’s 1000+ applications for every open position. They just won’t believe a resume that says you’ve run a million record a year data system of EMS ambulance run reports with a small staff. Plus maintaining the state’s DB of EMT’s, ambulances, and EMS facilities, ER’s.
    (Even our high-income UTexas Cray Y-MP tech manager (neighbor) went to building houses with relatives in 1995 even before the tech bust hit everyone else later.)
    SS is about the only safety net left after the booms & busts of decades, and all that incredible underemployed talent going to waste.
    A heart attack at age 55 (stress?) & subsequent triple bypass is not considered a partial disability by SS, nor is wife’s “sudden hearing loss syndrome” on one side a partial disability to SS for a nearly age 60 science teacher trying to manage a class of 30+ fifth graders.
    We pay our SS & Medicare taxes for 30 to 40 years, but don’t get any of the “investment” back, even partly, when its needed, unless you live to 62 (I’ve already outlived half my HS classmates) when you can recoup some of that investment “entitlement in govt terms” at $900 to $1100 per month.
    But before then, being “walking, healthy, & wounded” does disqualify you somewhat from employment better than part-time at $9 or $10 bucks an hour. The Medical Records Bureau & the credit agencies know your history, even if the records are full of errors.
    These “bottom of the food chain” jobs can be fun, though. As a grave shift security guard in downtown Austin, I got to walk through Bush election HQ alone (except for Karl Rove pulling an all-nighter) sniffing for burned coffee pots & looking for electrical & safety hazards. Those young people are messy and clueless on safety & fire hazards. Interesting “oppo” research going on there.
    Several of us on the guard staff had BS degrees in high tech & military or security experience in “intelligence by national technical means”. We did not vote for Bush & his radical right wing nuts who wanted to privatize SS. Or DOD, as in Halliburton, Blackwater ripoffs.
    Temp job: IRS. 1966 & 1999. Disaster. Same core engine for 33 years. COBOL on a mainframe. Like a card system with codes to plug in to little boxes. Look at your 1040, W-2, 1099 to see a sample of the gazillion little patchwork codes.
    SSA & IRS are interlinked. They match info by first three letters of your last name + SS#, so always make sure your SSA info meshes with IRS W-2, W-4 & employer wage report Form 941.
    Married folks, update your SS card, 1040, Voter ID when you get a new name driver’s license. Or keep your maiden name consistent across databases, including credit agencies, and Medical Records Bureau. Or not, if you want to hide from the Feds.
    I didn’t have much choice after getting a TS/Q clearance background investigation for USAF career field 99125L5 in 1967. My life has been an open book to the Feds since.
    Their “data warehousing” does not always work, though. My security guard card renewal is on hold because two different submitted sets of fingerprints (State) don’t match the Feds. Duh. They already have a dozen sets on file & now the latest don’t match? Ditto, Duh.
    Always expect glitches, bugs, and incompetence. You, too, can be “renditioned” or “rendered”, whatever. The Feds can fuck up a steel ball.
    Another temp job: US Census, 2000. Disaster. 23,000 app’s & tests for a few thousand enumerator jobs at $9 bucks an hour. Bad, unreadable maps, terrible database. No ZIP code maps. Low bid SW. (It cost $9 to park downtown back then).
    Follow-up run by Maurice Evans, the Bush buddy from Midland, Commerce Secretary, who denied funds for statistical cross-checks with utility bills, etc of mobile populations & minority neighborhoods. He wanted those & others undercounted, for later re-districting & gerrymandering & understating Fed funds to states based on population.
    He also cooked the books on COLA’s for SS & 1040 personal & standard deductions & COLA for how much of your SS check gets taxed.
    You can see how the BLS & BEA, Commerce & Labor Depts cook the books in Barron’s Mag, ShadowStats.com, and in Kevin Phillips books, esp. “Bad Money”.
    So did previous govts, especially Ronald Reagan and Tip O’Neill. It got worse thru GHWB, WJC, W. & it continues through Pelosi, Reid, & Obama.
    I sincerely Hope they wise up & Change what’s been done to run this country straight to the Dickensian PoorHouse.
    Add it all up & you won’t be surprised that our economy ran into the wall on Sept 18, 2008 & fell off a cliff. It has been obviously been the economic tsunami coming our way for decades to those of us who pay attention to such things.
    By the way, the Peter G. Peterson Foundation is lying about SS & its future. Google “Dean Baker new economist” for details.
    This is not “Stock Gumshoe” info, but a few insider “trading” tips of a Gumshoe nature.
    Sign up for what you can, while it still exists.
    Meanwhile, petition Congress to double the 1040 personal exemption & Double the standard deduction.

    That will stimulate everybody from our low paid enlisted troops & families, to walking wounded retirees, to removing heavy taxes from unemployed, & offset high property taxes for underwater homeowners & renters, & college kids working two jobs, & everybody.
    Remember: 53% of households with 71% of our persons live below the median household income. That’s more than 210 million “USA persons”.
    Pay for it with the Wall Street & other money center city securities transaction tax at 0.25% of value of trades, futures, options.
    This tax has existed, since about 1934, to pay for the SEC, at 1/300th of a percent. Bush lowered it to 1/833 of a percent around 2002 or so. It raised a Billion $ at that tiny rate on just SEC covered trades.
    Now you know why so many new financial “instruments” were excluded, hidden, or obscured from an underfunded & under”man”ned SEC oversight.
    Now check out the FOREX markets at $3 Trillion per day. What’s 1/4th of one percent of that?
    The bill is stuck in committee, as it has been stuck for 35 years, but getting more attention than before from all of us at the bottom of the economic food chain.
    Google “James Tobin”, the Yale Nobel Laureate economist who proposed the levy to reduce volatility in FOREX markets to keep 3rd world currencies from being trashed by traders.
    Check out TradersMagazine.com. They don’t like it a bit, but then they do not care about their country or hundreds of millions of USA folks who’ve been in a slow, rolling recession / depression for many decades now, according to Kevin Phillips & our extended family’s personal experiences since 1929 (old newspaper Linotype operators had a window on all the news of the world).
    The personal income tax system cannot sustain our national or global obligation. Nor can corporate income taxes.
    I just simply like the justice of the securities transaction tax levy far more than a national sales tax.

    Ponder, Enjoy, Hope for Change, :)


  60. This stock transfer tax would result in more economic disaster, bankruptcies and bailouts, literally hundreds of thousands of jobs lost, most of them not even trading jobs. The average investor will lose a quarter of their retirement: cost of tax, traders and trading companies will immediately cease operations resulting in less competition and much greater costs from wider spreads, greater broker and fund management fees, mutual funds will pass the tax cost of stock trades on to investors, and most importantly, much reduced compounding over the years. Ironically, Zero to Negative net tax revenue. Most capital will move to other countries. We already tried this tax. The 0.20% trans tax in 1929 did not prevent the stock bubble nor crash. 125 million Investor Class voters will vote NO for whomever votes for this tax. Stocks and commodities have nothing to do with the real estate and banking crisis. Leave us real investors alone. Time for those directly responsible for the financial crisis to be responsible and bail themselves out instead of making stock investor and traders look guilty. Good grief. What a scam.

    Must read. The aftermath of a securities transaction tax. This is what would happen to only NYC with an even smaller tax on the NYSE and AMEX. It would be multiples worse if national.
    New York City Independent Budget Office:

    The Sweden Disaster:


  61. Disingenuous at best, uninformed, stupid or machiavellian at worst.

    In the interest of full disclosure, Ronnie Lowenstein, the author of the NYC IBO hit piece against Wall Street paying its fair share of taxes, was a Federal Reserve Economist. Most economists work for the Fed or the government.

    The Federal Reserve is neither Federal Government nor Reserve, since it creates dollars out of thin air to buy Treasury debt.

    The Fed is a secretive Central Bank, the likes of which Franklin, Jackson, Jefferson, Kennedy, Lincoln, Madison and Washington thought were more dangerous than standing armies.

    Bloomberg won a Freedom Of Information Act suit for transparency against the Fed that may be stonewalled and appealed by the Fed all the way to the Supreme Court.

    With over 1000 economists on their taxpayer funded payrolls, the Fed, Government and Treasury still did not predict or prevent the 2008 Panic after generations of deficit usury public finance.

    Interest on the “public” debt which goes to the Fed to pay their 6% dividends and luxuries is only partly passed on to the Treasury.

    Fed usury is the third largest US budget item after Transfer Payments and Defense.

    Of course bank corporations would rather their customers pay taxes. They do, foregoing higher income or even jobs for so-called employer and retirement benefits.

    Wall Street Bankers balked at a simple 0.25% transfer tax on part of a quadrillion of financial transactions a year that could quickly and fairly get us out of the mess they created.

    As if a quarter of one percent tax would disrupt the economy.

    Banks didn’t have a problem with people paying up to 95% personal income taxes under FDR in WWII.

    They did not have a problem with consumer inflation into higher taxes robbing the middle class of real living wages.

    Banks and corps don’t have a problem withholding mandatory 13% FICA taxes today to keep wages down. They work with often error-riddle irresponsible database agencies and the IRS to violate Constitutional civil rights to privacy and property.

    Shadow bank corporations did not have a problem shipping jobs overseas and increasing the deficit debt usury which brought America to her knees.

    Banksters bribed Congress to rob taxpayers and the economy further in 2008 with TALF, TARP, PPPIP and the biggest pork barrel deficit spending ever. They claimed with a straight face and quivering voice by delaying big bank ruptures and ignoring moral hazard they prevented a total financial meltdown.

    We shall see in the fullness of time. Right now, the American economy looks like a slow motion Japanese Zombie horror film.

    The borrower serves the lender, as the Bible says.

    Debts are repaid one way or another as we all know.
    Depression, slavery and war are some of the consequences of too much debt.

    Take a good look at Obama’s biggest funders who became recipients of taxpayer money: Bankcorps, Lawyers and Unions.

    0 may have violated due process and property rights by sacking the head of GM and giving GM to the unions.

    The money trust paid a Princeton Academic who claimed to run against them, to sign into law the Federal Reserve Act and Income Tax Acts of 1913, rammed through around Christmas Recess without proper quorums.

    Woodrow Wilson went on to personally negotiate the Versaille Treaty for bankers hoping to get rich off defeated German people.

    Instead they got depression, wheelbarrow money and Adolf Hitler.

    There is little new under the sun.

    Banks like inflation and war, but not depression and hyperinflation which follow each other like the night the day.

    They got rid of the gold contract, Constitutional gold and silver currency standard, Glass Steagall Act and Net Capital Rules.

    We let them by continuing to entrust our money and elections to them. Now we are reaping the whirlwind harvest.

    In 1919 WW lay incapacitated in the Lincoln Bed from a stroke after turning the German people over to the bankers.

    What JWerst writes is true, particularly the part about a (Transparent) Tobin Transaction Tax replacing the IRS bureaucracy.
    The TTTT may be our only practical productive salvation.

    Countless unproductive hours are wasted complying with arcane convoluted subsidies, tax codes and red tape longer than the Bible. The IRS does not even answer tax questions consistently, let alone CPAs, Financial Planners and Tax Attorneys.

    The Income Tax is neither applied uniformly nor apportioned by census as required by the Constitution and the Consitutional Oath of Office.

    The 16th Tax Amendment was a Communist Manifesto Banker fraud on the people, asking them to violate their Constitutional Rights.

    Speakers of the House, Ways and Means Committees and Lobbyists juryrigged income taxes to the point personal buildings, corporate, farm and personal income paid no tax.

    The Treasury Secretary of the US who overseas the IRS dodged his taxes and got away with it.

    Meanwhile, working poor are forced to pay mandatory withholding regressive, triple taxed actuarially unsound FICA taxes.

    The Social Security Trust was raided and spent on the budget, replaced by unmarketable IOUs called Intragovernmental debt counted, like toxic bank collateral, as assets when there is no actual market value.

    The government house of cards may continue to fall down, with the 2008 panic only a foretaste.

    The immediate result may not be inflationary, as bonds and credit default and implode, but deflationary. The 15.3% Depression in GDP, 33% contraction in durable good imports and production and even greater losses in pensions, real estate and stocks are not inflation.

    It may not be gold and silver coins, but dollars that are more scarce for unemployed Americans without savings.

    Even a small number of 5 billion immigrants coming to America to get on the free family benefit bandwagon threatens Social Security.

    Many welfare agencies refused to implement fingerprinting or citizenship tests. They kept paying out free rides for dead people, hospitals, schools, welfare, even jails and prisons, where up to one third the inmates are illegals.

    The result was the President of the Dallas Fed, in his Storms on the Horizon speech at the San Francisco Commonweath Club a few years ago, identified $99T in unfunded government agency mandates.

    The number is higher today after the Obama regime promised to cut budget deficits and increased them fourfold.

    $100 T is more than 7 years of 100% taxes on GDP growth, which contracted at a -15.3% rate the past year.

    Wall Street Bank taxpayer bailout liquidity-driven securities markets with insider selling up to 52:1 are no sign of a recovery or turnaround.

    $200 Trillion in US derivatives is more than 15 years of 100% taxes on GDP.

    $600 trillion of global derivatives dwarf the global economy ten times.

    As a former Fed Chair noted, derivatives were great on the way up. As a large investor noted, derivatives can be weapons of mass financial destruction.

    Bank corporations gambled with derivatives, lost the rent money, got government to cover them with taxpayer money and more debt. Now the people are suffering.

    All the 1515.2 form SSA-521 Social Security gimmicks and mathematical spreadsheet tax calculations in the world do not obscure the fact that Medicare and Social Security are upside down like American people with payments and mortgages more than the cars, clothes, electronics, furniture and houses they cannot afford.

    All the schemes of all the kings horses and men cannot put Humpty Dumpty together again.

    Therefore, the advice to get Social Security as soon as you can may be the common sense elephant in the room that most people here missed.

    Medicare and the Social Security Trust were bankrupted by adding but not adequately funding benefits like AFDC, Dependents, Disability, Drugs, Hospitalization, Medicare, Medicaid, SCHIP, SSI, Survivor Benefits, Temporary Aid, and even unemployment under FDR, which led to the “Roosevelt Recession.”

    Ida May Fuller of Vermont was the first to receive a monthly social security check. She had paid in a total of $24.75. She received a total of $22,889.92.

    No wonder those who believe in free lunch lotteries refuse to fix Social Security. The spouse of at least one senator made a living with Social Security Disability claims paying a lump sum.

    Social Security benefits are available to families who did not pay into the Plan.

    Many foreign countries have handbooks on how to get American citizenship and game social security without paying in what they get out.

    In a nutshell, this is what’s wrong with cooercive government programs that do not protect liberty and property.

    American citizens pay more than four times the taxes of corporations. Bank corporations which pay a fraction of what real people pay, complain about taxes, expecting their customers to pay much more.

    Eliminating all failed taxes with a mandatory DC spending freeze plus an emergency 1% transaction tax on a quadrillion transactions a year, could generate $10 T a year to begin paying down debts and deficits accumulated over two generations.

    The technology exists for full transparency. Eliminating unproductive bureaucracies, keeping 99% of our transactions, encouraging savings and the subsequent productivity multiplier could allow the TTTT to be reduced from 1% to to one mil in less than a decade.

    Do we the people have the political will to vote for what’s right for America?

    Stay tuned.



  62. I did this for my 2 kids; one for only one month and the other for 4 years. All you have to do is sign up and the payments will come in like clockwork and will stop when a child gets to be 18.


  63. Enter text right here! I agree and why are we not talking about the specifics of what was taken or borrowed. Put a name on it a picture something tangable to be discussed.


  64. This assumes that you don't need the money to live on in the interim. With more people being forced into retirement, SS @ 62 has turned into the seniors' version of unemployment insurance.


  65. Hi Curious……….did you ever get the scoop on your question. It seems if you cancel your application and re evaluate in one year you would receive an adjustment for your recent contributions that would increase your check..???????


  66. You have quite an insightful statement. While I don’t agree with everything you say, I think you are right on with your comments on the government book cooking and the fact that our “leaders” have and are continuing to spend us into oblivion. The real “fiscal cliff” is the one we’re going to go over when the decades of money pumping, crony capitalism, and pandering finally collapses the United States. Don’t worry, the collapse will likely take the form of officially unacknowledged inflation. That’s always been the end game of reckless spending and fiscal policy. For those that say “this time, it’s different,” there are 2,000 years of recorded human history that say otherwise.

    In addition to spending much more than every penny they’ve ever gotten their grubby hands on, Congress has also made unfulfillable future promises (to Social Security recipients, federal civilian and military retirees). They’re going to deal with it through massive inflation, thereby impoverishing most of us. And the ones they will punish the most will be the ones who tried to do the right thing and save for their retirement. Inflation has and will continue to erode the purchasing power of those savings at a rate far greater than the pittance of interest earnings they’ll receive from CDs, bank deposits, or government bonds.

    Some food for thought….. What would you call a group of people who conspired together over the last 20 or 30 years to bankrupt and thereby destroy a country? When they knew or should have known the consequences of their reckless actions, should they be put on trial for Treason? Do citizens have a right to demand accountability from their government or are leaders simply exempted? Or should citizens just accept the consequences and shut up?


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