Hey, retirees: Looking for a way to bring in more money? Give back all the Social Security checks you have received so far.
But you had better do it fast, since this loophole could soon close.
An often-overlooked provision allows Social Security recipients to withdraw their original application for benefits and to refile. For many retirees already collecting benefits, the strategy—known informally as a “Social Security reset”—could sharply increase their monthly income. Larry Kotlikoff, a Boston University economics professor who has researched the strategy, likens it to finding tens of thousands of dollars or more “just lying on the sidewalk.”
Be warned, though: Not all retirees will benefit, and those who potentially would will need access to a large stash of cash to start the process.
That is because to withdraw your original application you must repay all the money Social Security already has paid you—and your spouse. Depending on how long you have been collecting, that can add up to a hefty sum, as your new benefit amount is based on your current age, not the age at which you originally applied for Social Security.
The strategy is particularly useful for retirees considering buying an immediate annuity, which, in return for a lump sum of cash, provides an immediate stream of monthly checks generally set up so a retiree won’t outlive the money.
Full story: How to Game Social Security – WSJ.com