Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Mary Beth Franklin, the Retirement Editor of Kiplinger's Personal Finance Magazine, to talk about a Social Security Do-Over. Mary Beth, I know a lot of people, who take Social Security benefits early at 62, they suffer a 25% reduction in benefits for the rest of their lives.

Mary Beth Franklin: That's right.

Kevin McCormally: A lot of those people regret it later on. Is there a way to change their minds and increase their benefit?

Mary Beth Franklin: Believe it or not, there is. There is a little known strategy that allows retirees to pay back all the benefits they have received so far and then start over again at a new higher rate.

Kevin McCormally: So, if they take a 25% reduction at age 62, pay back all the money at age 70, they would get that big bonus of 75% above what they got. So, they go from being a negative 25 to a plus 75.

Mary Beth Franklin: That's right. Let me give you an example; let's say, your normal retirement age of 66, you are entitled to a monthly benefit of $2,000, but you really want benefits early at 62, because you are afraid you might not live too long. So, at 62, you get $1,500 a month and that will increase with cost of living adjustments each year. Well, low and behold, you do reach 70 and you could have used that extra money because if you had waited to collect, your benefit would have been worth at least $2,600, that's 75% more than you are getting right now.

Kevin McCormally: That's amazing. How do you do this?

Mary Beth Franklin: Well, you file a Form 521 with the Social Security administration, it's called Request for Withdrawal of Application and then you have to pay all the money back. Now, it's a big chunk in the example I just gave you, it might cost you a $145,000 over those eight years of benefits. But right from that moment on, you start getting that benefit worth $2,600 a month.

Kevin McCormally: What about all the taxes you paid on those benefits during those eight years you got them?

Mary Beth Franklin: It gets even better, the IRS will refund your taxes.

Kevin McCormally: Okay, so this is a lot of money to pay back, who would have make sense for?

Mary Beth Franklin: It would make sense for anybody who has taken benefits early, had the reduction all their lives and then decide, they could use more money. It's like having your cake and eating it too. You just got an interest-free loan from Uncle Sam for eight years, you pay it back and start all over again.

Kevin McCormally: The key is having that $145,000 to pay back.

Mary Beth Franklin: That's the key.

Kevin McCormally: Thank you very much.