12/8/2010 update – the SSA revised the “Do Over” a bit. See the article “SSA Revises Withdrawal Policy” for details.
If you don’t know about this tactic, you can read the article The Ultimate “Do Over” by clicking the link. Briefly, this tactic provides a way for you to file for your Social Security benefit and then later, after your benefit would have been potentially increased had you not filed, you can re-pay what you’ve received and start over at your new age. (Read the article at the link above, it’s explained much better there…)
I didn’t tell the complete the story in that article though: there are a few items that you need to keep in mind with regard to this tactic. I’ll finish the story below.
More Information
Affordable Annuity. This tactic is called the Ultimate “Do Over” because it represents an extremely affordable annuity. By this I mean that, by going through the process of re-setting your benefit after repaying, you can effectively increase your benefit for an extremely low cost.
For example, if you filed and collected Social Security at age 62, and then at age 70 paid it all back – approximately $160,000 (no interest, just the payments!). When you restart your benefit at age 70 your new payments are increased by roughly $1,400 per month. In order to achieve the same income ($1,400 per month) with inflation adjustment, it would cost you a minimum of $230,000 (based on popular internet-based calculators). And that doesn’t include survivor’s benefits. Pretty much any way you figure it, this is a great deal.
Payback Includes Every Payment Received. When you figure out the amount that must be paid back, you have to include not only the amount you have received on your own account, but also any amounts others have received based upon your account – including your spouse, children, other dependents, and any ex-spouses who are taking benefits based on your record.
Each of these folks must consent, in writing, to the payback and subsequent stoppage (and restartage) of benefits. This might be problematic, especially if we’re dealing with an ex-spouse with whom there might be a contentious relationship.
For the administrivia-concerned: the payment must be made via a money order or cashier’s check.
There’s a Downside. You also need to know that there’s a downside to this tactic. While you’re collecting your benefit prior to enacting the “Do Over”, if you should happen to die, your spouse’s Survivor Benefit will be based on the earlier age benefit that you took before. This can result in a dramatically-reduced Survivor Benefit – which can be exactly counter to what you were intending to accomplish when you considered this tactic in the first place.
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Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article 
Okay, this has nothing to do with America’s celebration of independence from British rule… other than it’s a play on words and you know I can’t possibly resist.
If you own taxable investment accounts, real estate, collectibles, or literally any item that can appreciate or depreciate in value, you’ve likely had to deal with capital gains or losses on your tax return. (Actually, only if you’ve sold the item.) But how much do you really know about capital gains and losses? The IRS has published Tax Tip 2010-35 listing 10 Facts About Capital Gains and Losses – detailing what the IRS deems important about gains and losses and how they could effect your tax situation. Following below the IRS’ list is some additional detail on treatment of capital gains and losses.
By now you’ve likely heard plenty about the “lost decade” in the stock market: On January 3, 2000, the S&P 500 index closed the day at 1,455.22, and on May 28, 2010, the index closed at 1,089.41 – for a negative return on the nearly 10 1/2 years… I’m sure you’ve noticed in your investment statements.
Today, my friend and colleague, Steven Young, CFP®, has graciously provided a guest post, giving us his thoughts on the fiduciary standard of care. Steven operates his Fee-Only financial planning firm, 
Many of us are diligent about maintaining the “stuff” in our lives… we get regular oil changes in our cars (and have the tires rotated when we think of it), we try to make it to the dentist regularly, and we have the annual inspection of our furnace/air conditioner. But one aspect of our lives sometimes doesn’t get the attention that it really needs: our financial plans.
When faced with the high cost of college, you want to find and take advantage of every opportunity that you can to cut down on your out-of-pocket expenses, before you give in and take out loans. So after you’ve applied for all of the grants, scholarships, and other non-loan financial aid that you can, it’s time to consider what sorts of tax benefits may help out with your situation.
You see them on the news, in the newspaper, on the internet. Not every day, but certainly it seems like a new one every week: Key Economic Indicators. There’s the CPI, GDP, and Unemployment. There’s also the Consumer Confidence Index and Leading Economic Index. What’s this all about? What do these numbers mean? And most importantly, which ones should we pay attention to?
Consumer Confidence Index – this is a survey of 5000 consumers regarding their attitudes concerning the present economic situation and expectations for the economy going forward. This report can be helpful to understand how the current economy is affecting the point of view of “everyman” – and it often is an insightful prediction of the direction of the economy.
I haven’t had time to delve very deeply into the new Healthcare plan that the President signed recently. Somehow the pile of tax returns keeps getting in the way…
I’ve just released, in the Legislation section of this site, 
The “Great Recession” may have not been officially declared over just yet, but things we’re seeing in the financial world are showing that we’re regaining momentum, or at least solid ground in the markets. We’ve seen the stock market gain more than 60% since the low a year ago, which is remarkable even though we’re still a ways off the peak of 2007.
From time to time this question comes up: why can’t I use my IRA account to purchase a retirement home? After all, for many folks, the IRA represents a pretty large account, possibly even enough to purchase a retirement home outright – so why not?
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article 
The First-Time Homebuyer Income Tax Credit has been really popular with lots of folks – and there is still time to take advantage of it. As you may be aware, the name of the credit is misleading – it’s been expanded to include folks who owned a house for a significant period of time and have purchased a new home during the prescribed period as well.
When planning to save for future college expenses, you may run across several options – including insurance policies, savings bonds, retirement accounts and specific education accounts, such as Coverdell Education Savings and Section 529 plans.
In this article, we’ll be discussing an option that is available to all married recipients of Social Security retirement benefits – but you might not have thought of it. For most all married couples, it makes the most sense for the spouse with the higher wage base – that is, the spouse that has earned the most money throughout his or her working career – to delay receiving Social Security retirement benefits as long as possible.
We talked about this issue of the accountability standards for financial professionals some time ago (click 
The start of a new year often signals a time for change–especially when it comes to taxes, and 2010 has brought some major changes. As of January 1, the federal estate and generation-skipping transfer (GST) taxes are repealed, and the step-up in basis rule is modified for 2010. While it’s possible (and some believe very likely) that Congress will reinstate these taxes, until that time, it’s important to understand these significant federal tax law changes and how they might affect you.
It’s possible Congress may reinstate the estate tax retroactively, that is, back to January 1, 2010, in which case heirs who already received their inheritance may have to reimburse the estate to enable it to pay the reinstituted estate tax. On the other hand, heirs who haven’t received their inheritance may have to wait for their gifts until the likely challenges to the constitutionality of instituting the estate tax retroactively have been resolved in the courts. In any case, until these issues have been cleared up, it may be wise for executors and trustees of estates in 2010 to retain sufficient assets in the estate to pay a potential estate tax.
The generation-skipping transfer tax is a federal tax on transfers of property made, either during life or at death, to an individual who is more than one generation below you, such as your grandchild. The tax, also repealed for 2010, had a $3.5 million exemption in 2009 and a top tax rate of 45%. However, like the estate tax, the GST tax is also scheduled to be reintroduced in 2011, with a $1 million exemption and top tax rate of 55%.
In addition, heirs who want to sell inherited assets not covered by the step-up in basis will have to try to figure out the decedent’s cost basis in order to calculate potential capital gain. For example, assume you inherit shares of XYZ Company stock in 2010. You sell them and now have to determine whether you owe a capital gains tax. First, you need to know if any of the $1.3 million step-up in basis applies to these shares. If your XYZ stock didn’t receive a basis step-up, you’ll have to figure out the cost basis of your inherited stock. Arriving at the cost basis of inherited property may prove difficult, if not impossible, especially if the decedent didn’t keep accurate purchase records, or if the stock split over the years, or if the decedent received some of the stock by gift or inheritance.
Another potential issue surrounds the constitutionality of Congress reinstating the estate tax and/or GST tax retroactive to January 1, 2010. Congress has imposed taxes retroactively in the past and when challenged, taxpayers have lost the majority of the time. Whether Congressional reinstatement retroactive to January 1 will withstand a challenge is conjecture at this point since Congress has yet to act, but the possibility of reinstatement of either or both taxes further adds to the estate planning conundrum in 2010.
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
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Jim’s book – A Social Security Owner’s Manual, is now available on Amazon. Click this link for the 
And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.