Unusual Social Security Claiming Strategies: Costs And Distributional Effects

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Executive Summary

When to claim Social Security is one of the most important decisions Americans face when approaching retirement. Recently, several unconventional claiming strategies have come to light - "Free Loan," "Claim and Suspend," and "Claim Now, Claim More Later" - that have the potential to pay higher lifetime benefits to some individuals, increasing system costs. In the "Free Loan" strategy, an individual can claim benefits at a given age and later repay them and file again, obtaining an increased benefit from the delayed filing. This strategy is equivalent to a "No interest" loan from Social Security and could potentially cost the program as much as $11 billion a year.

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