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By Christine Benz | 02-14-2013 12:00 PM

Common Social Security Misconceptions

Doug Nguyen and Andrew Salata of the Social Security Administration clarify retiree confusion about the impacts of age, marriage, divorce, and do-overs on retirement benefits.

Christine Benz: Hi, I'm Christine Benz for Morningstar.com. Social Security is a key component of most retirement plans, but there's still a fair amount of confusion about the ins and outs of the program. Joining me to discuss some common myths and pitfalls of the Social Security program are Doug Nguyen and Andrew Salata of the Social Security Administration.

Gentlemen, thank you so much for being here today.

Doug Nguyen: Well, it's great to be here, Christine.

Andrew Salata: Thank you.

Benz: You are on the front lines with individuals who are receiving Social Security benefits, and you've bought with you some of the common myths, misconceptions, and pitfalls associated with Social Security. One, and I know this has been a hot topic among some of our Morningstar.com users, it's this idea of a do-over. It had been a very generous provision in the past; that's changed though. Doug, let's talk about that.

Nguyen: Right. Christine, you're exactly right. It was a very popular thing when people were taking benefits and withdrawing at about every other year, and we were seeing people treating Social Security like it was an interest-free loan and that is not what the benefit was designed to do.

Benz: So, the basic idea, though, is that you can start your benefits, then restart them at some later point down the line at maybe a more advantageous point. As long as you payback those previous benefits, that's an OK maneuver. How has it changed though?

Nguyen: Right. Back in December 2010, we began restricting the number of times that an individual can withdraw an application and reapply. They can now withdraw once in a lifetime, and they have to do it within 12 months of the first month that they become entitled to benefits.

Now, there are some things that are closely tied to that. We have to get consent statements from all the auxiliaries that are on the record. All the benefits must be repaid including Medicare benefits, and the auxiliary benefits that we paid to the dependents have to be paid back. And then they can reapply and start over again at a higher benefit rate.

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