Maybe you chose to collect Social Security benefits early, at 62, instead of waiting until you were eligible for full benefits. Now you're older, and you wish you were receiving a larger monthly check. You could be a candidate for a do-over strategy that lets you halt your current benefits, pay back interest-free all you have collected, and restart your benefits at a new, higher rate based on your current age.

Here's how it works: Let's say you qualified for a full benefit of $1,600 a month at 66, but because you took Social Security early at 62, your benefit was reduced by 25 percent for the rest of your life — to $1,200 a month, in this example.

If, however, you had delayed collecting benefits, you would have received an 8 percent credit for every year beyond your normal retirement age until you reached 70. In this example, you would be eligible to get about $2,100 a month at 70 — or $900 more than you are currently receiving.

To restart the clock, you must first file Form 521 at your local Social Security office to request a withdrawal of your application for benefits. Your retirement benefits will stop almost immediately — and if your husband or wife receives spousal benefits based on your work record, his or her benefits will stop, too.

Then the Social Security Administration will send you a letter telling you how much you need to repay (including any spousal benefits). The process may take several weeks. Once you repay the benefits in a lump sum, you can reapply for new, higher payments based on your current age.

If, for example, you received $1,200 a month starting at age 62, plus annual cost-of-living adjustments through age 70, you would have to repay about $130,000. That's a lot of money, but for some people it's worth the price to get an additional $900 a month in guaranteed income for life and a higher benefit for a surviving spouse.

By comparison, it would cost a 70-year-old man about $190,000 to buy an immediate annuity from a low-cost provider, such as Vanguard, that would provide $900 a month initially, plus annual inflation adjustments and a 100 percent survivor benefit. That's 46 percent more expensive than "buying" a lifetime annuity from Social Security.

There are a few financial risks, not the least of which is that you could die before you recoup your investment. Plus, you may have to go without Social Security benefits for a few months while the agency sorts out how much you have to repay and you reapply for benefits. When your benefits stop, so do the automatic deductions that cover your Medicare premium. You'll have to pay the Part B premium yourself — currently $96.40 a month for most retirees — until your Social Security benefits resume.


Mary Beth Franklin is a senior editor at Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.