Social Security Closes the Have-Your-Cake-and-Eat-It-Too Loophole
A worker who earns $75,000 a year and retires at 62 could receive about $2,100 a month. Or, he could have $2,800 a month if he retires at 66. Or, he could start drawing at age 62, change his mind, pay it all back and start drawing the higher figure at age 66. Think of it like a gamble on your health status. Early retirement is optimal if you get sick and die young. But if you are still healthy 10 years later, you can change your bet. See NCPA explanation here.
Until now. Social Security has changed its mind. You only get 12 months to change your mind.
This is probably a good policy change. But as with ObamaCare, how does the administration get away with making so many health and retirement benefit changes without any act of Congress?
But just having one rule that everyone understands and can strategically plan for is, well, so unlike the federal government.
Too bad. I was planning on gaming the system.
I want to second your last point. How does the Social Security Administration get the authority to unilaterally change the rules (no doubt affecting the retirement plans of thousands of people who have already chosen early retirement) without any action by Congress?
What a deal — take early retirement so you can maximize your Social Security benefits in the event you die before your mid-80s. Then, once you reach age 70 and have a better idea what you health status will be, change your mind and give Social Security the money back. It’s probably good they closed a loophole that allowed people to game the system. It would be even better if private accounts were allowed so we could all maintain better control of our retirement.
The loophole only worked if you had the money to pay them back at age 70. Most people I know don’t have the self control to keep from spending thousands of dollars in an effort to game the system.
(Is it too early in the week for such a high level of cynicism?)