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“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.

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Gwen
Guest
Gwen
October 8, 2010 9:15 am

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

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Bigg Fredd
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Bigg Fredd
October 8, 2010 8:06 pm

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

Rumor has it they plan on eliminating that loophole.

WalterA
Guest
WalterA
January 7, 2013 7:37 pm

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

az_jack
Member
az_jack
December 10, 2013 4:46 pm

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.

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Jim
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Jim
December 21, 2013 8:04 pm

The breakeven point is about 80 years old regardless .

A.M. Deist
Member
A.M. Deist
March 25, 2016 1:14 am
Reply to  Jim

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
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Stacia
July 22, 2015 1:28 pm

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

SA Williams
Guest
SA Williams
December 19, 2015 1:18 pm

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.

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amdeist1
Member
amdeist1
March 25, 2016 1:04 am

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 monthly check needs to have their head examined. And anyone who has to borrow the amount they need to pay back to get the larger check better keep their eyes open; the guys in the white coats will be comming to ge them.

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A.M. Deist
Member
A.M. Deist
March 25, 2016 1:38 am

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 the old-age and survivors’ fund in calendar 2031; if the funds are combined, they would be exhausted in calendar 2029. The exact depletion dates depend, of course, on future demographic and economic trends. After the reserves are exhausted, the system still will be receiving tax revenue, but it will only be enough to pay about three-quarters of scheduled benefits – unless Congress changes the benefit formulas, raises the payroll tax, or makes other changes such as raising the cap on taxable wage income (currently $118,500).

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fran
Member
fran
July 1, 2016 5:22 pm

Regarding form SSA-521: problem is if you have paid taxes on the social security benefits you received, I don’t think you can get that back. so you pay back more than the net benefits you have received. Maybe you can file amended tax returns for those years.

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Deborah K. Wheeler
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Deborah K. Wheeler
March 22, 2019 12:41 pm

What if you had drawn SS at 62 then went on Disability. Will they put you back on Social Security at 65/66 or keep you on Disability?

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Gena
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Gena
April 15, 2019 12:50 pm

I was on disability when I came to the age of Social Security. The government automatically switched me over. I thought I would have to do it, so I visited the SS office, but they said “no” that would be taken care of. And it was. It switched from Disability to Retirement automatically. I don’t know if this is the case in each different state. My state is Nebraska.

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Carol A Weaver
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Carol A Weaver
April 16, 2019 10:47 pm
Reply to  Gena

The same in NYS. They automatically switch you at the exact same amount you are making at that time, of course.

Dave
Guest
Dave
March 22, 2019 4:58 pm

I think the whole idea for this form would be best for someone who has not really started collecting social security yet. or just filed and immediately filed this form afterward when starting another job. Then all of the Social security payments from that job would be saved until later when you turned 67 or when you really wanted to retire.

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Toni A James
Guest
Toni A James
March 31, 2019 3:29 pm

This form ssa-521 is not to boost your ss but to withdrawal from benefits …..

Ray
Guest
Ray
April 1, 2019 10:26 am

reference SSA 521 as stated by some people selling books. They never mention that one has to give back. What is mentioned is that you will start to make thousands extra per months. Be aware of these CROOKS/SNAKE OIL SALESMEN. Sorry names can’t be mentioned.

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Yolba
Guest
Yolba
September 1, 2019 2:45 am

I believe SSA will only grant application of form 521 if you have received 12 months or less in SSA Payments.

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