Strange But True: Free Loan From Social Security

Alex Golub-SassAlicia H. Munnell Nadia S. Karamcheva

IB#9-6

The brief’s key findings are:

  • An unconventional strategy allows individuals to use early Social Security benefits like a “free loan,” paying back the principal while keeping the interest.
  • If this strategy were widely adopted, it would cost Social Security $6 billion to $11 billion per year today and more in the future.
  • The strategy primarily benefits higher income individuals, who have the financial resources to invest their benefits and tend to be in better health.