Do-Over Option
Categories: Derivatives
Think: mulligan. Like in golf.
There aren't do-overs in a lot of places we wish there were (whyyyy did I eat that entire pie?!), but there’s one place where we’re glad it exists: Social Security.
Social Security, like all government programs, isn’t so simple. You might think it’s just a matter of "when I get n years old, this will happen, and I’ll get x money," but no. You can start collecting SS benefits early, at age 62, but “full retirement” age is 67 for people born after 1960.
Many people file for Social Security early—before the “full retirement” age—and when they do that, they get their benefits, but at a reduced rate. No likey. If only you had waited to start collecting benefits, you’d have fatter monthly retirement paychecks. For many, it’s worth waiting a few more years for a sizable increase in monthly Social Security paychecks.
That’s where the Do-Over Option comes in: people who file for SS early are allowed to “take it back,” so to speak, and can apply again later. Which means that, if they received any SS funds, they have to return them, and they have to take back their application—all like it never happened. Everyone gets one “do over” with Social Security. Just one...so don’t go crawling back too early if you can help it.