For more than three months the Office of Management and Budget (OMB) has been reviewing Social Security's proposal:
...[T]o establish a 12-month time limit for the withdrawal of an old age benefits application. We also propose to permit only one withdrawal per lifetime. These proposed changes would limit the voluntary suspension of benefits only to those benefits disbursed in future months.
OMB has gone beyond its own guidelines on the timeframes for these reviews and has had to officially extend the time for review. I did not think there was anything complicated or controversial about this. It is aimed at shutting down attempts to game Social Security by filing claims for old age benefits, receiving benefits for a term of years and then withdrawing the claim and paying back the benefits to get a higher benefit later.
I actually hope they keep the rule the way it is, except I have no problem with only allowing each person to use it once. I would like to wait until 70 to start taking benefits, but the downside is a chance that I'll get nothing. So I'll probably take benefits early, and if this rule is changed, I'll be locked in. I agree that the terms are very good (no interest on the money paid back), but I doubt that it is costing SS much, and that could be dealt with by charging interest.
ReplyDeleteI did not think there was anything complicated or controversial about this.
ReplyDeleteThe proposed rule makes sense, because it may save administrative costs.
However, it's possible that when people use this they choose badly and end up collecting less in benefits. That cost could be more than the administrative cost. That would have to be studied by actuaries.