The Center for Retirement Research at Boston College released a brief that discusses how to receive a free loan by deciding when to receive Social Security benefits.
Retirees have an option to start receiving Social Security benefits: a) as early as age 62 but receiving reduced benefits; b) full retirement age (66), or; c) as late as age 70 which would result in higher monthly benefits.
The wrinkle involved the law essentially providing one with the ability to change his or her mind. For example, a person could choose to begin receiving Social Security payments at age 62, but then change her mind and start over at age 69.5 with the higher payments.
The person would have to pay back the benefits she recieved up to that point, but only the nominal amounts (the pay back would not have to include interest earned).
Assume that the person simply invested all of the Social Security payments over that time period (note that that study indicates that this approach would work best for those who are relatively well off). Also assume an $1,100 per month payment and consistent 4% rate of interest. The amount of interest received between age 62 and 70 is in excess of $18,000.
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