Retire Early Home Page Discussion Board

[intercst]

In another thread Cut-Throat and I were discussing withdrawing your Social Security claim to get increased benefits later on. This recent column (June 16, 2007) from the New Jersey Times calls this "The Suze Orman Social Security Scheme" This piece was written by the Copley News Service Social Security expert Tom Margenau.

http://www.nj.com/living/times/community/index.ssf?/base/news-2/1181966903166940.xml&coll=5

Your financial adviser is al luding to a completely different situation. He's talking about people who withdraw (not switch) a claim for benefits. This is usually done by well-to-do people for tax reasons.

For example, a retiree might file for his Social Security benefits at age 62 but then learn that the additional income puts him into a tax bracket he doesn't want to be in. So he has every right to withdraw (i.e., cancel) his Social Security claim. But as part of that process, he has to agree to repay all the benefits he's already received. Then at some later point when his tax situation changes, he can file for benefits again.

Suze Orman, a well-known financial adviser who has written many books and appears frequently on TV to promote her books and videos, pushes her own Social Security scheme involving withdrawal of a Social Se curity claim. She advises retirees to file for reduced Social Security benefits at age 62. She then tells them to invest every nickel of benefits they receive between ages 62 and 66. Then, at age 66, she instructs her clients to withdraw their original Social Secu rity claim. As part of that plan, they have to repay all benefits received. They should be able to do that with no financial problems assuming they followed her ad vice and invested all the Social Security money they had received.

The good news is that they (her clients) get to pocket the interest. The SSA does not charge interest when they ask people to repay benefits after a claim is withdrawn. And finally, to close the circle on the "Suze Orman Social Security Scheme," she tells her clients to file a new claim for full (age 66) benefits right after they withdraw the old age- 62 claim.

Although it is totally legal, it couldn't work for most retirees. The reason is that most people need the proceeds from their Social Security check to pay the mortgage or rent or grocery bill. Only the very well-to-do see their Social Security check as merely another investment vehicle.

</snip>

Here's a link to the SSA website on "withdrawing a SS claim"

http://www.ssa.gov/OP_Home/handbook/handbook.15/handbook-1515.html

intercst

[Cbarbra]

really informative reply.
_________________
susan prince