Q & A
I started drawing Social Security at 62. I drew on it for 16 months then went back to work. Would there be a value in paying back what I received and waiting until 66 to restart?
Answer: You only have one year to pay back your benefits, inclusive of any Medicare premiums paid out of your Social Security check, and then reapply at a later date for higher benefits. So you’re out of luck on that score.
However, by earning enough to lose all your benefits via the earnings test, you will be able to get higher benefits starting at 66 or, if you suspend your benefit when you reach 66, at age 70. Social Security has a provision called the “adjustment of the reduction factor,” which permanently raises a worker’s retirement benefits starting at full retirement age when he loses months of benefits due to the earnings test.
Indeed, if you were 62 and applied, say by mistake, for your retirement benefit, but earned enough every year through full retirement to lose all your benefits via the earnings test, Social Security would give you benefits at full retirement as if you never applied for benefits before. And if you were to suspend your benefit at full retirement and start it up again at 70, you’d get the largest possible benefit starting then, again as if you’d never applied before.
There’s one thing, however, to keep in mind. If the earnings test wipes out some or all of your benefits, it will also wipe out some or all of the spousal and child benefits received on your work record. The reason is that the earnings test is applied proportionately to all benefits received on the worker’s earnings record. The adjustment of the reduction factor does not, however, compensate you for the loss of these spousal and child benefits.
Source: Ask Larry Kotlikoff, PBS.