Borrowing Money From Social Security Interest-Free

Michael Rubin is a Certified Financial Planner (CFP) and a Certified Public Accountant (CPA) with more than 25 years of experience in the retirement planning, investment strategy, and tax planning industries. He also holds an MBA from the Kellogg School of Management at Northwestern University.

JeFreda R. Brown is a financial consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career. She is the CEO of Xaris Financial Enterprises and a course facilitator for Cornell University.

It was once possible to start collecting Social Security benefits at age 62, the earliest possible age, and later, at the age of 70, repay all the money you'd received from the Social Security Administration (SSA). You could then refile for benefits as if you'd never gotten a single check.

Because you were older, the amount of your monthly check would be higher. All the cash you had received over the years from the SSA was like an interest-free loan from the government.

That loophole was closed in 2010, so you can no longer "borrow" money from the SSA.

If you file for benefits before age 70, you now have only 12 months after you start receiving payments to suspend them until a later date. If you do decide to suspend your benefits, you must still repay the money you have received.

File and Suspend for Married Couples

Another way of getting extra money from the SSA—this one involving married couples—was permitted for a few more years.

Known as "file and suspend," this practice involved the higher-earning spouse applying for Social Security as soon as they reached their full retirement age (FRA). This also allowed their spouse to begin collecting spousal benefits, worth half of the filer's benefits.

The filer would then suspend their application, but the spouse could still collect spousal benefits. At the age of 70, the original filer would begin collecting their benefits at a higher rate.

"File and suspend" enabled a couple to come out many thousands of dollars ahead. This was partly because spousal benefits reach their maximum value at the spouse's FRA. An individual's own benefits, on the other hand, reach their maximum value at age 70.

The Bipartisan Budget Act of 2015 prevented retirees from filing and suspending by making it so a spouse's benefits were automatically suspended at the same time as the person making the request.

Note

One exception to this rule is that divorced spouses may continue receiving benefits.

Current Withdrawal Requirements for Social Security

The 2015 law still enables retirees to stop taking Social Security payments if they desire. For instance, if you get a new job or inherit money after you start taking Social Security, you may want to suspend your benefits.

Delaying taking your Social Security benefits—and your spouse's, if you are married—until you reach the age of 70 will allow you to receive a larger benefit at that time.

Note

If you delay taking Social Security benefits until after your FRA, you are eligible for delayed retirement credits that increase your monthly benefit.

To withdraw your application to receive Social Security payments, you must:

• Have reached your FRA but not yet be 70 years old
• File form SSA-521 within 12 months of your request to receive the benefits
• Repay all the benefits you and your family received based on your initial application

Repayments must include money withheld from your Social Security check for Medicare Part B, C, or D premiums; voluntary federal income tax withholding for closed tax years; and any garnishments, such as for child support. Once your withdrawal application has been approved, you have 60 days to change your mind.

You can withdraw your application for benefits only once in your lifetime.

Penalties for Receiving Payments Early

You can begin taking Social Security payments at the age of 62, but they will be reduced based on the number of months that will have to pass before you reach full retirement age.  

The thought behind lower monthly payments is that someone living to the average life expectancy will get the same total amount of money regardless of when they retire.

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

1. Social Security Administration. "Benefits Planner: Retirement: If You Change Your Mind."
2. Social Security Administration. "Benefits Planner: Retirement: Voluntary Suspension of Benefits (Also Called “File and Suspend”)."
3. Social Security Administration. "Bipartisan Budget Act of 2015 Closes Social Security Loophole."
4. Social Security Administration. "Benefits Planner: Retirement."

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