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There’s more evidence that you can’t depend on the Social Security Administration (SSA) to give good advice or ensure you receive all the benefits the law allows. You need to know the rules and doublecheck SSA’s numbers. The latest evidence comes from SSA itself through two audit reports from its Office of Inspector General (OIG).
One audit report focused on Social Security retirement beneficiaries who continued to work after claiming their retirement benefits before full retirement age.
Under the law, someone who’s receiving Social Security retirement benefits before full retirement age loses some of the benefits when earned income during the year exceeds certain levels. But the loss in benefits is supposed to be temporary. Once the beneficiary reaches full retirement age, the SSA is supposed to adjust the monthly benefits by providing a credit for each month the beneficiary didn’t receive benefits because the earned income limit. This increases the beneficiary’s monthly payments and ultimately makes the individual whole.
The OIG looked at a sample of beneficiaries to determine how well SSA applied these rules and found SSA didn’t do well.
In the sample of beneficiaries OIG examined, it found that the earnings were not adjusted properly for 53% of the beneficiaries. About 71% of those mistakes were underpayments of benefits. SSA overpaid the remaining beneficiaries. When the results are extrapolated over all beneficiaries who had benefits withheld because of the earnings limit, the OIG estimates SSA made improper payments of about $1.4 million over 12 months.
In another report, the OIG examined how SSA calculates survivor’s benefits for widows and widowers who also receive pensions for work for federal, state, and local governments that was not covered by Social Security. These individuals are subject to the government pension offset (GPO), which reduces their Social Security benefits based on the amount of their pensions.
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In addition, surviving spouse benefits can be claimed as early as age 60. But benefits will be reduced if they are claimed that early. Higher survivor’s benefits are paid if they are claimed at a later age, up to full retirement age. The result is that some surviving spouses who receive government pension won’t be eligible for any survivor’s benefits if they claim at an early age. But if they delay the claim until a later age when their Social Security survivor’s benefits are higher, they’d be eligible for some survivor’s benefits.
SSA’s policy is that SSA representatives must explain the advantages and disadvantages of filing their claims for survivor’s benefits and the age at which to claim benefits.
The OIG examined cases of survivor’s who didn’t receive any survivor’s benefits because their government pensions were too high. It found that about 9% of these widows and widowers would have been eligible for some survivor’s benefits if they had waited until full retirement age to claim their benefits. On average, the survivor’s would have been eligible for an additional $26,400 in benefits. In aggregate they would have received more than $40 million over their life expectancies.
Social Security retirement benefits are an important source of cash flow for most retirees. It’s important to maximize those benefits, because they are guaranteed for life and indexed for inflation. You can’t depend on the SSA for the right answers, especially in the more complicated areas of the program, such as survivor’s benefits and the earned income limit. You need to be aware of the benefits you’re entitled to. Consider working with a financial advisor or using one or more of the Social Security benefit calculation software programs available online.