People have been debating whether it is possible to take an interest-free loan from social security for up to one year without penalty and many are wondering how true this is. Some of the logic behind these ideas would be discussed here but it does not cover the aspect where you are expected to check with your trusted financial planner on what is best for you and your situation. It is expected you will always want to seek trusted and sound financial advice when making decisions related to your money, retirement and as well, your well-being.

In theory, yes, it seems there is a way to collect social security benefits as a loan without interest- kind of. According to the Social Security Administration’s website,, you are allowed a once in a lifetime benefit to withdraw your decision to receive benefits, granted you pay the received benefits back in full at that time. This means that not only you but any child or spouse that received benefits on your behalf must pay their benefit amount back as well. If other people are involved in receiving benefits based on your eligibility, they may also be required to sign paperwork to the fact that you are withdrawing your decision to receive benefits at this time.

You can change your mind within the space of 12 months of filing for social security benefits despite the fact that it is regarded as an interest-free loan. You will be permanently receiving your benefits based on your original filing and losing out on any possible increased income by waiting longer to receive social security benefits if you are not able to pay back your benefits within this 12 months’ time frame. Always remember that if you delay collecting benefits until 70, you will see an increase in your monthly benefit amount.

While you are technically able to receive this money as an interest-free loan, it is important to note that this wouldn’t be a lump sum amount handed over to you and expected to be paid back in a year. Because you filed for social security, you will start receiving your benefits on a monthly basis. If a person is in a position to file for social security only because they need a loan, it is likely that by the end of the 12 month period, they will still be in need of the money borrowed and unable to pay it back in full, leaving them stuck with the lower benefit amount for the remainder of their retirement. While it is possible to use this once in a lifetime withdrawal benefit to earn more interest, it is risky for most and not really intended to be used this way.

Some flexibility will be given to the filer in the case that their circumstances change or they decide early on that they were not ready to file for social security and this is the reason for the filing reversal. Filing reversal can also help someone who was not aware of the increased delayed filing benefit with a do over to their approach to their social security benefit. Many people’s backbone and retirement plans is social security and it should not be taken lightly. 

You might try looking for better yielding index or mutual funds to get more out of what you are currently doing. You can also pick up a side gig and sock that money away so as to collect more interest on it. You can try things like reselling on eBay or reselling vintage items on sites like Etsy if you are unable to do much for physical labor or commit to a work schedule. Get creative and look for ways to find money to collect interest on that you won’t need to pay back in a short amount of time. While you may make a bit of income on interest from a social security “loan”, the stress around repayment may not be worth it.

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