Social Security Still Shortchanging Beneficiaries

You don’t ask the IRS to help you pay the lowest taxes possible, and you shouldn’t rely on the Social Security Administration (SSA) to ensure you receive the maximum benefits.

I’ve heard many anecdotal reports over the years from readers and financial advisors about Social Security representatives giving incorrect answers or different reps giving different answers to the same question. But reports over the years from the Inspector General (IG) of the SSA are more detailed and revealing about the shortcomings at the agency.

Several new reports were issued in late 2020.A report from the IG issued in December was divided into several sections.

One section was devoted to a study of how well the SSA followed its policy of locating and contacting individuals or estates who likely are entitled to benefits through the earnings of a recently deceased beneficiary. SSA’s policy is that its staff must try to locate and contact such relatives and estates.

The IG reviewed a sample of cases and determined that SSA made no attempt to locate or contact the relatives or estates of deceased beneficiaries in most cases.

The latest report found that most of the time SSA made no attempt to contact beneficiaries who were under-paid. Most of those underpaid received no notice from the agency and had no idea they were being underpaid.

Two additional reports were issued by the IG in November. One report focused on individuals who claimed retirement benefits before full retirement age, while the other studied surviving spouses whose benefits were offset by government pensions.

When someone receives retirement benefits before full retirement age but continues to earn income from working, the monthly benefits are reduced if the earned income exceeds certain levels. But once the beneficiary reaches full retirement age, the monthly Social Security benefits are supposed to be increased to restore the benefits that were reduced in earlier years.

The IG found that the monthly benefits were not adjusted properly for more than half the beneficiaries whose cases they studied. Sometimes SSA overpaid the beneficiaries. Other times, the beneficiaries were underpaid. It also found a large group of beneficiaries whose benefits weren’t adjusted at all after they reached full retirement age.

For the surviving spouses whose benefits were reduced because they earned government pensions, the IG found many of these beneficiaries weren’t properly advised by SSA.

The reduction from receiving a government pension would be less in many cases if a surviving spouse delayed claiming the survivor’s benefits for a few years. SSA policy is that reps are supposed to advise the surviving spouses of the advantages of delaying a claim for benefits.

But the IG found this usually wasn’t done. The surviving spouses received lower (or no) benefits because they weren’t accurately advised of the best choices for them.You can see the IG reports on the web at oig.ssa.gov.

I don’t blame the SSA employees. Social Security is a complicated system written primarily by lawyers and Ph.Ds. It takes a lot of study and training to learn key details of the program. In addition, the agency is operating with outdated technology that makes it difficult for the reps to access the information they need and make accurate calculations of benefits.

The IG reports make clear that you need to carefully review your Social Security claiming options and seek good information from other sources. Know how you want to claim benefits before you contact anyone at Social Security.

That’s one thing I learned when researching my new book, “Where’s My Money: Secrets to Getting the Most out of Your Social Security.” It’s a good way to learn which benefits are available to you and how to maximize your benefits. The book is available on amazon.com or directly from the publisher at Regnery.com.