Early Retirement

NY Times - You Can Have Your Benefits and Defer Them, Too

SELDOM in life is it possible to change your mind about a major financial decision. With a house purchase, for example, you’ll probably lose at least your earnest money or your down payment — if you don’t get sued. And good luck getting the Lexus dealer to redo the deal if your new car proves to be a lemon.  

But Social Security retirement benefits, which come as a lifetime annuity widely regarded as better and safer than one from any insurance company, are different. Under a longstanding but little-known part of the law, retirees who decide to start collecting benefits are permitted to change their minds and start over, reaping the progressively higher payments brought by deferral until age 70.

In other words, you can start collecting at 62, saving and investing that money, and then at age 70 file a withdrawal application and still get the maximum benefits accorded to those who wait to start collecting. All you have to do is repay what you’ve collected so far (plus any money withheld for Medicare premiums). You can even deduct the repayment or take an income tax credit for taxes you paid on benefits.

A hypothetical retired couple, both 70, who began collecting at 62, could raise their standard of living by more than 20 percent, according to calculations by Laurence J. Kotlikoff, an economist at Boston University.