Liz Weston: Don’t Let Social Security Fool You


Few retirement decisions are as critical or as easy to go wrong as when and how to take your Social Security benefits. The rules can be so convoluted that many people trust what Social Security workers tell them, but it could turn out to be a costly mistake.

Certified Financial Planner Kate Gregory of Huntington Beach, Calif., Uses sophisticated Social Security claims software to recommend strategies that maximize clients’ lifetime benefits. Gregory advised one of his clients, a widow, to apply for her own small retirement benefit first so that her survivor benefit could increase, and then switch to the larger benefit later. However, when the woman contacted Social Security, she was told that she could only get the survivor benefit.

“It left her really pissed off,” says Gregory.

The widow was finally able to get the benefits she is entitled to in the correct order, but Gregory and other financial planners are concerned about people not receiving professional advice and who could be misled.

“Most people are going to say, ‘Well, that’s what the government told me’ and let it go. And that’s unfortunate, ”says PSC Mary Beth Franklin, author of“ Maximizing Social Security Retirement Benefits ”and editor for Investment News.


A lot of money is potentially at stake. The difference between the best and worst claims strategies could be as high as $ 100,000 over the lifetime of a single person and $ 250,000 for married couples, William says. Meyer, CEO of Social Security Solutions, a complaints strategies website.

Even seemingly minor decisions can have disproportionate consequences. People claiming benefits may be told that they are entitled to six months in arrears and that claiming the lump sum only slightly reduces their monthly benefits. Over time, however, this reduction adds up, especially when increases in the cost of living are factored in.

“The agents say, ‘Hey, your monthly income only goes down by $ 50,’ or whatever, ‘Meyer says. “They don’t tell you, ‘Hey, over your lifetime that might be a reduction of $ 20,000. “”

A 2016 study by the US Government Accountability Office found that applicants “did not consistently receive the key information people might need to make informed decisions.” A 2018 report from the Office of the Inspector General of Social Security estimated that 9,224 widows and widowers aged 70 and over were underpaid by about $ 131.8 million because they were not properly informed of their options.


Social Security workers aren’t supposed to give advice, just education, Franklin says. But she and other financial planners can tell many stories of people being encouraged to enroll early when waiting was better, or receiving bad information such as being told they were not entitled. to certain benefits or that they could not take actions that were in fact permitted.

William Reichenstein, head of research at Social Security Solutions, was eligible for a since-abandoned strategy called Restricted Enforcement, which allowed him to receive spousal benefits based on his wife’s earnings, while his own benefit had to increase. The Social Security officer who handled the claim ignored Reichenstein’s directive and instead enrolled him for retirement benefits. Reichenstein may have withdrawn the wrong claim and obtained spousal benefits, but the mistakes are often irreversible. He advises applicants to be informed and to react quickly in the event of a Social Security error.

“Find out what you’re entitled to and make sure you get it,” Reichenstein says.

To be fair, many people have no idea how complicated the claim decision can be and may not understand what Social Security officials are telling them, Franklin says.

Social Security administers several types of benefits: retirement benefits based on your own employment record; spousal and survivor benefits based on the employment history of a current or former spouse; family allowances for minor children of Social Security beneficiaries and various invalidity benefits. Each benefit has its own regulations, and the best strategy may depend on your marital status, longevity, tax situation and many other factors.


People can educate themselves by visiting the newly redesigned Social Security site and learning how the various benefits work, Franklin says. AARP has a free Social Security Claim Calculator that allows people to model different strategies. Or you can spend $ 20 to $ 40 and more to use paid software, such as Social Security Solutions or Maximize My Social Security, which allows you to model more complicated situations, including those involving a minor child or pension. ‘a job that didn’t work. contribute to Social Security. Consulting a financial planner who uses similar software can also be a smart decision.

Franklin urges people to learn as much as possible before going to Social Security, and then keep a record of all interactions with the agency, including the names of representatives and their direct phone numbers, just in case. they would need to appeal or correct a decision.

“I’m not here to disparage Social Security officials because most of them work very, very hard,” Franklin said. “But the rules are so complex.”


This column was provided to The Associated Press by the NerdWallet personal finance website. Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score”. Email: [email protected] Twitter: @lizweston.


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