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Columns: Dr. Don
Don Taylor, Ph.D., CFA, CFP   Expert: Don Taylor, Ph.D., CFA, CFP
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Price paid in reduced benefit
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Taking Social Security early is costly

Dear Dr. Don,
I started receiving Social Security at age 62. I'm now 68. Will there be any increase for me or can I start collecting at full retirement now?
-- James Juncture

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Dear James,
You pay a price when you start collecting Social Security retirement benefits at age 62. That price is reduced benefits.

As stated on the Social Security Web site, if you start benefits early, they will be permanently reduced based on the number of months you receive benefits before you reach full retirement age. There's no bump up in benefits when you reach full retirement age. The only increases you'll see are in cost-of-living adjustments.

That said, there is an interesting option to repay the Social Security retirement benefits that you've received to date and to start over collecting benefits based on your current age. If you can make this work financially, you could reapply for benefits based on your current age.

A recent USA Today article, "Have your retirement cake early and eat it, too," describes how people who began collecting Social Security at 62 can later pay back the benefits they received from age 62 and then start collecting benefits at the rate for which they are eligible at that later date. Someone in this circumstance could start receiving benefits at age 62, repay the benefits at age 66 and then start collecting at the full retirement rate.

If you want to pursue this option, I suggest you consult with a fee-only financial planner to discuss the costs and the benefits. The Bankrate feature "Financial planners: not just for millionaires anymore" can help you select a financial planner.'s corrections policy -- Posted: April 3, 2008
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