I find Larry Kotlikoff's pieces on Social Security to be ridiculously sensationalized. I rarely link to them. However, even though he's hyping this one too much, I still think he's onto something:
Despite our best efforts, we continue to be shocked by new horror stories about the Social Security Administration (SSA) that our readers bring to our attention. The latest galling example is one of the worst we've ever seen, and involves how the agency decides what to do when someone wants to defer benefits.
Readers of our book know that we are big believers in delaying benefits where possible. If someone delays claiming their retirement benefit until it reaches its maximum value at age 70, their monthly benefit will be 76-percent higher — in inflation-adjusted terms — than if they claim at age 62, which is the earliest age at which normal retirement benefits may be taken.
Now, we've just learned, to our amazement, that Social Security is denying the delayed benefit wishes of some applicants and is instead forcing them to accept six months of retroactive benefits and a lifetime of lower benefits thereafter. Some beneficiaries may not even be aware that this is being done to them. This is a colossal injustice. ...
Say someone comes in to their local Social Security office a few months shy of their 70th birthday and, as we're all told to do, gives the agency a head's up on their filing intentions....
Instead of accepting their application for benefits to begin at age 70, the agency's representative instead gives the person a six-month retroactive payment! This act resets the person's entitlement back to what it was six months prior and wipes out half a year of Delayed Retirement Credits (DRCs). ...
We brought this to the attention of Jerry Lutz, the former Social Security technical expert who has reviewed nearly everything Larry has ever written about Social Security. Jerry consulted the SSA operations manual that sets forth agency policies and came back as amazed as we were.
"Based on SSA regulations, retroactivity is automatically applied to applications filed after FRA unless retroactivity is expressly restricted by the claimant," he wrote.
11 comments:
Your title is ridiculous...per the expert cite in your article, SSA does do what the claimant wants. If they don't want retroactive application, they just have to say so.
8:53 you are kidding right? before a claimant knows which option to choose they need to know what options are available. Social security retirement is often a confusion process at any age. SSA should be required to document informed consent of the different options and get it in writing
No, SSA does nto give financial advice. If you want to know about it, talk to a financial expert. Do you know how many confusing, contradictory and conflicting Rules, Regulations, POMS, HALLEX, internal memos, etc. that there are and then you are going to expect some GS 5 clerk to educate you on your options? I think not.. Just as you waive your rights by not knowing them, some of the responsibility for your life is on you.
1158 does the term public service mean anything at all to you--do you even understand the concept? I hope you are not an agency employee because you put us all to shame but I fear that you are.
We assume no liability by not providing advice. We do not provide advice as to whether you should retire at 62, 66+ or 70. We provide the facts, as we know them when asked.. You can be fired for giving advice to the public.
informing someone of what their options are is not the same as advising them on what option to take
How do you know they didn't??
When I take a retirement claim and there is the possibility of retroactive entitlement, I generally compute the benefit amounts for each month (including any applicable DRCs) in the retroactive period through the next four months after the current month. I then present the claimant with the numbers and ask him/her what month they want to file as of.
What I do has nothing to do with giving advice, and I certainly won't be fired for it.
Personally, I find the article ridiculous and overblown. Based upon my experience (almost 24 years of it), any person delaying retirement to accrue DRCs will tell me EXACTLY when they want their benefits to begin. They always do.
Kotlikoff makes money by pandering to the need of wealthy individuals to accrue even more wealth. He is obviously angry that the agency has limited his ability to do this in some ways by taking away some of the tools he used in the past (such as, for instance, limiting withdrawals of claims to within 12 months of filing, limiting withdrawals to once per lifetime, etc). I wouldn't be surprised to see the voluntary suspension rules go away at some point as well.
If this is Kotlikoff's idea of horror, he should thank God he leads such a great life. Really, horror?
Well done 7:21 most CRs take the responsibility seriously, pull thier querries and presenet the information to the number holder in a responsible manner.
Anonymous 7:21 represents the kind of service SSA provides every day to millions of customers. Way to go!!
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