The Social Security Administration has eliminated a loophole that had allowed Social Security recipients to start receiving benefits when they first became eligible but then gave them a chance to re-do their benefits at a higher level later on.

Anyone can collect Social Security benefits starting at age 62, but if you elect to get early benefits, your monthly check will be much lower than if you wait until full retirement age. Many people elect early benefits, but then realize it was a mistake. Because of a rule allowing you to change your mind, many people were electing early benefits as a planning technique.

A provision of Social Security law had allowed beneficiaries to apply for early benefits but at a later age they could withdraw their application, reapply and receive full retirement benefits. All they had to do was pay back all of the benefits they had received. Since there was no interest added to this, it gave those who could afford to do the pay-back a second look at their choice, at no additional cost. Of course, this really only benefited those wealthy enough to afford the pay-back. Those who spent their monthly checks were stuck with the lower amount and could not afford the “do-over.”

Under the new rules, retirees may still withdraw their Social Security applications, but only once and only within 12 months of first receiving benefits. You can still change your mind if you file for early benefits, but only if you change your mind quick enough. And, you still have to pay back those early benefits. And, you can only do it once. So, this planning strategy is no longer available for those who could afford to take the chance for several years and make a possibly large pay-back in order to get higher monthly benefits.

Here is the SSA news-release on the change: