Another retirement planning strategy has bitten the dust.
Social Security published new rules this week limiting what is known as do-overs.
The agency had previously put the word out informally that it intended to put an end to the policy that allowed recipients to file for Social Security, collect for a while, then change their minds, pay back the money they had already received, and then refile for higher benefits at their current age and level.
These do-overs were formulated as a way for people who took early retirement and regretted it to change their minds and go back to work.
But apparently people had been using the opportunity differently. They'd file early for Social Security, invest the money, and let it earn interest until they'd reached 70, the maximum age for increasing benefits. Then they'd pay back only what they were required -- the amount of benefits received -- refile for higher benefits and keep the interest on the original payments.
It was too good a deal. "The agency is changing its withdrawal policy because recent media articles have promoted the use of the current policy as a means for retired beneficiaries to acquire an 'interest-free loan,'" a statement from Social Security announcing the policy change said.
The new policy limits redos to the first 12 months after someone files for benefits, and it permits only one application withdrawal per lifetime. "The 12-month limitation period is a financial disincentive," the new rules said. "There is little to be gained by investing benefits for only 12 months."
While the new rules are effective immediately, there is a 60-day public comment period for people who see this issue differently. So if you object, speak your piece.