Posted on 15 February 2011
By Mark Miller
The door may not be closed just yet on Social Security do-overs, as reported in December. Janet Novack of Forbes reports that AARP has weighed in on behalf of seniors, asking the Social Security Administration (SSA) to give current benefit recipients until December 8th to execute a do-over maneuver.
Late last year, the SSA announced new rules that clamped down on the complex–but lucrative–do-over maneuver, which allowed beneficiaries to increase their payments by thousands of dollars annually through a “re-setting” of the date when benefits begin.
Most Social Security recipients come out ahead in the long run by waiting until their full retirement age to file for benefits, rather than filing earl at age 62. But the “do-over” feature of the program made it possible to reverse an early filing decision and re-file at a later age. The catch is that you must repay all the gross benefits you’ve received (before deductions for Medicare Part B premiums), which can easily total $100,000 or more for the average recipient.
Forbes has played an interesting role in the back-and-forth on this issue. Explaining its decision to end the practice, the SSA cited media coverage of do-overs, and specifically mentioned a 2008 Forbes article by Novack featuring extensive quotes from Larry Kotlikoff, a Boston University Professor of Economics who has been an advocate of do-overs.
The SSA hasn’t yet issued final rules on do-overs, so stay tuned.