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Would you happily give the United States government a check for nearly $80,000? Mary Slattery did. Realizing she had retired too early to get full retirement benefits from Social Security, Slattery found a way to turn back the clock – and put more money in her pocket.
During the years Mary Slattery worked as an occupational therapist, she didn’t think much about money. She focused on the joy she found helping disabled children and adults improve the quality of their lives. Slattery worked mostly part-time and switched jobs often. Her work paid enough to support her, but when she retired it was without a pension.
Slattery, 70, sold her home and moved into subsidized senior housing. Now, with money from the sale, she found herself searching for a safe place to invest that would also provide some income. A close friend in the apartment complex encouraged her to buy an annuity, but she was unsure.
“I don’t know – I was just nervous about an annuity,” she said. “I didn’t know enough about it even though I read what she gave me. So then I saw this article in the paper.”
The article described how a woman of Slattery’s age, receiving the same monthly payments from Social Security as Slattery, increased her check by $600 per month. The woman repaid the government all the early retirement benefits she had received, and then reapplied for Social Security benefits at her older age to claim a bigger monthly payout.
Slattery was intrigued. She had taken early retirement at 62 and she had enough savings from the sale of her home to cover the repayment of benefits she had already received. Could she qualify and increase her income? She went to visit her local Social Security office to find out.
“The kid there said, ‘You can’t do that. What you are talking about?’ So I gave him the article.” Slattery said the article didn’t convince the agent, so she went to another office. “They also had not heard of it and asked if they could have a copy of the article and they gave one to everybody.”
It’s not surprising that the local office workers were unaware of the little known provision. Only a small number of the millions of eligible retirees participate in, or even know about, the repayment plan.
When Slattery couldn’t get the answers she needed on her own, she got her local alderman involved. He supplied her with the number for a supervisor at the Social Security office who got the ball rolling. With no guarantees of acceptance, Slattery applied to reverse her retirement and wrote a check to the Social Security Administration for $79,534.80.
Slattery was eager to hear a decision, but month after month, there was no word. She repeatedly called the Social Security office to ask about her status. “We don’t know,” was the standard reply. For Slattery, waiting was “nerve-racking.”
After eight months, Slattery’s application was approved. The good news came in the form of cash, and lots of it. Slattery used her bank’s automated teller one day and discovered an unexpected deposit of $10,000. The government had placed months of back payments into her checking account through direct deposit. Slattery now receives an additional $500 a month in Social Security payments and is elated. “I got my annuity without buying an annuity — and I was covered by the government!” she said.
Jason Fichtner, Acting Deputy of Social Security, counsels against thinking of the provision as a long-term investment opportunity.
“The trust funds were never designed to be used in this fashion. Social Security was basically designed to replace a certain amount of income in retirement. It was never designed to be interest-free loan for people,” said Fichtner. “We currently do allow that, but it is something we are also looking into as a policy change.”
Initially, Slattery’s friends didn’t offer much support for her idea. “Everybody said, ‘Oh, you can’t give the federal government that money, they’ll rip you off,’” she said. “I don’t know anybody else who has done it, and anybody I’ve told about it thinks I’m crazy that I did it.”
Of course this strategy isn’t for everyone, but for Mary Slattery, choosing to “undo” her retirement was the right way to go. “I feel like no matter what happens, unless they have to lower people’s Social Security, I’m as well off as I can be and I don’t have to worry about CDs and investing and things that I don’t like to do anyway. I feel like it was a wonderful gift.”