Strange But True: Free Loan From Social Security

How and When to File a Claim When it comes to planning for retirement, Social Security is a major factor for the majority of Americans.

At present, pensioners have the option of collecting their full benefits starting at FRA, receiving a reduced amount starting at age 62, or delaying retirement until age 70.

At which point they will receive a larger monthly payment. It is estimated that the reductions and delayed retirement credits are roughly actuarially fair for a person with a normal life expectancy.

Strange But True: Free Loan From Social Security

There is a reduction in early retirement benefits to account for the additional time they will be paid out.

The delayed retirement option offers higher benefits but for a shorter remaining lifetime. Thus, employees will, on average, receive the same lifetime benefits regardless of when they file their claim (between years 62 and 70).

Several novel claiming tactics have emerged as of late, each with the potential to increase system costs while also providing higher lifetime benefits to select individuals.

In this article, we will examine one such plan of action; we will refer to it as the “Free Loan from Social Security” plan of action. In the first part, we’ll go through the steps involved and the benefits of using this tactic.

Borrowing Money From Social Security Interest-Free

Historically, one may begin receiving Social Security payments at the earliest age of 62 and then, at the latest age of 70, repay the full amount of benefits obtained (SSA).

In this case, you might reapply for benefits as though you had never received a payment before.

Since you were getting older, the amount of your monthly check would increase accordingly.

The Social Security Administration (SSA) payments you’ve received over the years are similar to a no-interest loan from the federal government.

The SSA stopped allowing people to effectively “borrow” money from them once the loophole was closed in 2010.


If you apply for Social Security benefits before you turn 70, you can no longer delay payment beyond the initial 12-month grace period.

If you opt to put a hold on your benefits, you will still be responsible for paying back any money you’ve already received.


This tactic stems from a little-known provision of law that permits people already receiving assistance to renounce their eligibility and apply again.

3 As an illustration, a person can start collecting Social Security at age 62 and then again at age 70, when they will receive a larger payment.

He makes good on his promises to repay his perks. Since the claimant is only responsible for reporting the standard amount of benefits, he has the option of investing the money and keeping the interest.