These Numbers Are Alarming

     From CBS News:

... There are approximately 10.1 million Black children nationwide, and Census data reveals an alarming 9.6% of them, or about 975,000, had lost at least one parent as of 2021. That figure has doubled in the past decade, with a sharp increase due to the COVID-19 pandemic. One study found that Black children lost caregivers at twice the rate of White children from April 2020 until the end of 2022.

Recent Social Security data shows that only about 26% of Black children who have lost a parent — 257,533 — are receiving survivor benefits, according to the analysis by David Weaver, a former Social Security Administration executive and researcher. The comparable percentage for non-Black children is 46%. Roughly 30,000 fewer Black children are receiving survivor benefits than in 2009, the last time the data was broken down by race. ...

For those who are eligible, a lack of awareness that Social Security offers payments for family survivors — and not only retirees — is often cited as the primary impediment to connecting children with the benefits they're owed. The surviving parent or caregiver is responsible for claiming the benefits on the child's behalf, and many are unaware that the benefit exists. ...

    Social Security generally knows when someone dies. Couldn't they send out a notice addressed to the survivors of the decedent at the decedent's old address notifying them that survivor benefits may be available? How difficult is that?

    By the way, the numbers for white kids is itself alarming. The numbers for African-American kids is way beyond alarming.

    Also, this is further proof that when it comes to Social Security, most people know almost nothing and half of what they think they know is wrong.

The Rich Get Richer

      From the Michigan Retirement and Disability Research Center:

Disparities in Social Security claim ages have risen since the early 1990s. With high earners increasingly likely to delay claiming, and also living longer on average than lower earners, late claimants may differ in critical ways from early claimants. Using Social Security Administration data and focusing on men, we find that late claimants have lower mortality than those who claim at age 62, so late claimants are adversely selected. As a result of selective claiming combined with improvements in actuarial adjustments, the return to delaying claiming has become systematically positive for those who actually delay, but not for those who claim early. We further find that selective claiming increases benefits by more for those with higher lifetime earnings because their return to delay exceeds actuarially fair amounts by larger margins. Lastly, we find that selective claiming has a modest effect on total payouts, but a more consequential effect on inequality in lifetime benefit payouts. In the aggregate, the increase in Trust Fund payouts as a result of adverse selection in claiming was 0.5% for the most recent retiring cohorts. Yet, lifetime benefit payouts are 1.9% higher for those in the highest quartile of lifetime earnings as a result of claim-age differences, compared to what payouts would be if they had the same claim ages as those in the lowest quartile, and this contributes 2.8% to the difference in expected lifetime benefits between the highest and lowest quartiles.

I Agree That It’s A Problem But I’m Still Aghast

     From Tom Margenau’s syndicated column:

There is a provision of Social Security law that is rather archaically called the “annual earnings test.” It is sometimes also called the “retirement test.” (More about where those terms come from in a minute.) But I call it the Social Security earnings penalty. And I’ve never liked this law. Before I explain why, let me clarify what I am talking about.

The rules say that if you are a Social Security beneficiary who is under full retirement age and still working, $1 must be deducted from your Social Security checks for every $2 you earn over $18,240 annually. A more lenient penalty applies in the year you reach full retirement age. The earnings threshold is $48,600 with a 3-for-1 withholding scheme. In other words, $1 is withheld from your benefits for every $3 you make over $48,600. And once you reach your full retirement age, the penalties go away. Starting with that month, you could make $1 million a day and still be eligible for Social Security checks. ...

To illustrate, I’ll use my own mother as an example.

Back in the 1970s, she was getting Social Security widows benefits, but she was working part time to supplement her rather meager benefits. She would start out the year reporting her anticipated earnings to her local Social Security office. They would adjust her benefits accordingly, applying the $1 deduction for every $2 earned. Inevitably, as the year went on, she’d work a little overtime or pick up a couple of extra hours of work. She would dutifully report her change in anticipated earnings to the Social Security people, and further adjustments would be made to her monthly widows checks. More often than not, she’d be charged with an overpayment and be asked to return some of her Social Security funds. 

Then maybe she’d be laid off for a time, and her earnings would go down; she’d file yet another report with the SSA, and there would be more adjustments to her benefits. Sometimes, the SSA owed her some extra money. 

Eventually, once the year was over and she got her W-2 form, she would make a final report of her earnings to the Social Security office, leading to yet another benefit adjustment. And on top of that, they would ask for an estimate of her anticipated earnings for the new year; more adjustments would be made, and the whole vicious cycle would start over again.  

My mom used to complain bitterly to me about this, saying, “Can’t you do anything to help me?” I always had to tell her that there was (and still is) a law that says SSA employees cannot work on any cases involving their relatives. 

Still, when people griped to me about how they couldn’t understand the constant tinkering with their Social Security benefit amount due to the earnings penalty, I used to tell them, “If I can’t keep my own mother’s records straight, how do you expect me to help you?!” .. 

So, because the earnings penalty isn’t going away any time soon, let me share with you some tips for dealing with it. Of course, you could play by the rules and religiously report your earnings to the SSA — and then get stuck in the vicious cycle of earnings variances and benefit adjustments that plagued my mother. ... 

Or you could bend the rules a bit. You could tell the SSA that you plan to make less than whatever the earnings threshold happens to be. So, for example, for this year, you would say you expect to make less than $18,240, even if you think you will make more than that. What that means is that the SSA won’t withhold any of your benefits. But you must remember that you will have to pay back some of that money once the year is over with. At the beginning of 2021, you will tell the SSA how much money you made in 2020, and they will calculate how much money you have to pay back. 

If you don’t like the idea of having to owe the government any money, you could go the other way around. For example, you could tell the SSA you plan to make $100,000 in 2020, even though you actually expect to make much less. In this scenario, the SSA won’t send you any Social Security checks. Then in early 2021, you would tell the SSA how much money you actually made in 2020, and they will send you a check to cover the benefits you are due. 

I know some of my former SSA colleagues will be absolutely aghast at these suggestions. They will say that I am coaching people to lie to the government. But c’mon, chill out! Both scenarios I presented require the claimant to eventually settle the books with the SSA. ...

Not Just Retirement

From the Center on Budget and Policy Priorities

Problems For Another Widow

     I had posted recently about the problems a widow faced after she reported her husband’s death to Social Security and a Social Security employee recorded it as if the husband had died a year earlier than he did. Now comes a second report of another widow who dutifully reported her husband’s death and another Social Security employee recorded it as if both husband and wife had died instead of the husband!

     These reports could be signs of a systems problem.

Boomers, Sooner Or Later

     Half of all baby boomers are now over 62, making them at least potentially eligible for Social Security retirement benefits.

How Much Does Motherhood Cost Women in Social Security Benefits?

     From the abstract of How Much Does Motherhood Cost Women in Social Security Benefits?, a study by Matthew S. Rutledge , Alice Zulkarnain and Sara Ellen King:

• The lifetime earnings of mothers with one child are 28 percent less than the earnings of childless women, all else equal, and each additional child lowers lifetime earnings by another 3 percent.

• When examining Social Security benefits, the motherhood penalty is smaller than the earnings penalty. But mothers with one child still receive 16 percent less in benefits than non-mothers, and each additional child reduces benefits by another 2 percent.

• The motherhood penalty is almost negligible among women receiving spousal benefits, but mothers who receive benefits on only their own earnings histories see significantly lower Social Security income.

Full Retirement Age Increasing

     From U.S. News and World Report:

Most baby boomers can receive the full amount of Social Security they have earned at age 66. However, retirees who will turn 62 in 2017 need to wait an extra two months to collect their full Social Security payments. Starting this year the retirement age begins a gradual increase toward age 67. Here's how the older retirement age will impact how much you receive from Social Security.

A longer wait to claim full payments. The Social Security full retirement age is 66 for people born between 1943 and 1954. For those born during the five years after that, the full retirement age will gradually increase in two-month increments from 66 and 2 months for people born in 1955 to 66 and 10 months for those born in 1959. The full retirement age is 67 for everyone born in 1960 or later. ...

Comgressional Hearing On Maximizing Social Security

     The Senate Special Committee on Aging held a hearing yesterday on Maximizing Your Social Security Benefits: What You Need to Know. A group of wealthy Senators were wondering why everyone doesn't wait until age 70 to claim their Social Security retirement benefits. Since there's a delayed retirement credit to encourage people to wait, the Senators figure it must be lack of information keeping people from waiting. There definitely is a lack of information. It's a longstanding frustration for me that most people think that Social Security is simple. No, it isn't. No program that pays benefits in many different categories to tens of millions of people could possibly be simple. Even when you try to tell people about the rules that affect them personally, their eyes start glazing over almost immediately. However, the real reason that people claim benefits earlier than some wealthy people think they should is economic necessity. Most people aren't wealthy like these Senators. They don't have the resources to survive more than a few months after retirement without Social Security. 

     Not that it matters to many people but the math on the delayed retirement credit isn't as wonderful as it's cracked up to be. You get 8% more a year for each year that you delay taking Social Security benefits but that's not compounded and it has to be stacked against the facts that you don't get paid Social Security for the years you waited and that you may die before any theoretical breakeven point or even before drawing Social Security retirement benefits at all. Even if you survive long enough, is it irrational to want to take the money when you're still young enough to be able to do something with it? Life is short. Eating dessert first may not always be a bad idea.

Statement From Social Security Works

     A statement from Social Security Works, a major advocacy group:

“Last night, the Republican leadership agreed to release their hostages: the need to raise the debt limit, the need to keep the government operating, and the need to ensure that all Social Security benefits can continue to be paid in full and on time beyond 2016.  When hostage takers release their hostages, we are, of course, relieved that the hostages are no longer in harm’s way, but this is nothing to celebrate.  That the ransom isn’t steeper is also not something to celebrate.

Among the ransom is a diversion of Social Security resources towards virtually nonexistent fraud.  Those provisions will likely require workers with disabilities to wait longer to receive their earned benefits and may prevent some from receiving their earned benefits completely.  That is wrong.  The legislation has some good provisions, along with the ransom.  It does ensure that Medicare beneficiaries will not experience drastically large premium increases.  It also closes a loophole that was introduced in the law relatively recently that allows wealthier Americans to game the system by claiming extra benefits inconsistent with the goals of the program.  Though some provisions are positive, Social Security legislation, as a matter of principle, should go through regular order, in the light of day.

If that were done, Social Security would be expanded. As the overwhelming majority of Americans recognize, Social Security’s one shortcoming is that its benefits are too low. Congress should follow the will of the people by expanding those modest but vital benefits and restore the program to long range actuarial balance by requiring the wealthiest among us to pay their fair share.”

The Actual Language From The Big Deal -- Doesn't Look Dramatic But Hard To Understand

     The reporting from various media sources last night on the Social Security provisions of the deal between the White House and Congressional leaders varied from confused to inadequate to completely wrong. We have the actual bill now. Here is some of the actual text of the bill with my interpretation, or maybe I should say questions, in brackets and bolded:

• Not later than October 1, 2022, the Commissioner of Social Security shall take any necessary actions, subject to the availability of appropriations, to ensure that cooperative disability investigations units have been established, in areas where there is co-operation with local law enforcement agencies, that would cover each of the 50 States, the District of Columbia, Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa. [Congress demands that Social Security extend cooperative disability reviews to every state and even to the Northern Mariana Islands but limits this to the extent that Congress appropriates money, dramatically undercutting the demand]
  
• Section 3 811(a) of such Act (42 U.S.C. 1011(a)) ... is further amended by striking the period at the end and inserting ‘‘, except that in the case of a person who receives a fee or other income for services performed in connection with any determination with respect to benefits under this title (including a claimant representative, translator, or current or former employee of the Social Security Administration), or who is a physician or other health care provider who submits, or causes the submission of, medical or other evidence in connection with any such determination, such person shall be guilty of a felony and upon conviction thereof shall be fined under title 18, United States Code, or imprisoned for not more than ten years, or both.’’. [I don't understand. It's now a crime to submit medical evidence in support of a disability claim? This doesn't make sense to me.]
• Section 1140(b) of such Act (42 U.S.C. 15 1320b-10(b)) is amended by inserting after the second sentence the following: ‘‘In the case of any items referred to in subsection (a)(1) consisting of Internet or other electronic communications, each dissemination, viewing, or accessing of such a communication which contains one or more words, letters, symbols, or emblems in violation of subsection (a) shall represent a separate violation’’. [Even viewing an inappropriately used Social Security symbol is a crime?]
  
• The Commissioner shall carry out a demonstration project ...[A]ny such benefit otherwise payable to the individual for such month (other than a benefit payable for any month prior to the 1st month beginning after the date on which the individual’s entitlement to such benefit is determined) shall be reduced by $1 for each $2 by which the individual’s earnings derived from services paid during such month exceeds an amount equal to the individual’s impairment-related work expenses for such month [OK, we're only talking about a benefits offset demonstration project.] ... For purposes of paragraph (2)(A) and except as provided in subparagraph (C), the amount of an individual’s impairment-related work expenses for a month is deemed to be the minimum threshold amount. [This sounds like a stringent offset. Any earnings over impairment-related work expenses are subject to the offset. That would strongly discourage work by Social Security disability recipients]... In this paragraph, the term ‘minimum threshold amount’ means an amount, to be determined by the Commissioner, which shall not exceed the amount sufficient to demonstrate that an individual has rendered services in a month, as determined by the Commissioner under section 222(c)(4)(A). [What are you saying here? There is a threshold amount beyond the impairment-related work expenses? I don't understand what you're trying to say.] The Commissioner may test multiple minimum threshold amounts.[So lots of thresholds will be tried. Good.] ... An individual who has authorized the Commissioner of Social Security to obtain records from a payroll data provider under subsection (c) shall not be subject to a penalty under section 1129A for any omission or error with respect to such individual’s wages as reported by the payroll data provider.’’.  [You're going to enforce the benefit offset by getting electronic records from employers and you won't punish the claimant if these records are mistaken. Sounds fine if these electronic records are accurate. Are they? I don't think my firm is reporting wages to anyone other than the IRS. What about self-employment?]
  
• If an individual is eligible for a wife’s or husband’s insurance benefit (except in the case of eligibility pursuant to clause (ii) of subsection (b)(1)(B) or subsection (c)(1)(B), as appropriate), in any month for which the individual is entitled to an old-age insurance benefit, such individual shall be deemed to have filed an application for wife’s or husband’s insurance benefits for such month. ... If an individual is eligible (but for section 202(k)(4)) for an old-age insurance benefit in any month for which the individual is entitled to a wife’s or husband’s insurance benefit (except in the case of entitlement pursuant to clause (ii) of subsection (b)(1)(B) or subsection (c)(1)(B), as appropriate), such individual shall be deemed to have filed an application for old-age insurance benefits. [I think they're ending file and suspend.]
  
• An initial determination under subsection (a), (c), (g), or (i) shall not be made until the Commissioner of Social Security has made every reasonable effort to ensure—  ‘‘(1) in any case where there is evidence which indicates the existence of a mental impairment, that a qualified psychiatrist or psychologist has completed the medical portion of the case review and any applicable residual functional capacity assessment; and ‘‘(2) in any case where there is evidence which indicates the existence of a physical impairment, that a qualified physician has completed the medical portion of the case review and any applicable residual functional capacity assessment.’’. [This ends the Single Decision-Maker project. This modestly slows down disability determinations.]
  
• Section 201(b)(1) of the Social Security Act (42 U.S.C. 401(b)(1)) is amended by striking ‘‘and (R) 1.80 per centum of the wages (as so defined) paid after December 31, 1999, and so reported’’ and inserting ‘‘(R) 1.80 per centum of the wages (as so defined) paid after December 31, 1999, and before January 1, 2016, and so reported, (S) 2.37 per centum of the wages (as so defined) paid after December 31, 2015, and before January 1, 10 2019, and so reported, and (T) 1.80 per centum of  the wages (as so defined) paid after December 31, 12 2018, and so reported,’’. [This would end the Disability Trust Fund problem but only for three years, at which point we may have to go through the same "crisis" again.]
  
• The Commissioner of Social Security shall annually submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the number of work-related continuing disability reviews conducted each year to determine whether earnings derived from services demonstrate an individual’s ability to engage in substantial gainful activity. [Is work supposed to trigger a continuing disability review, that is, if you do any work, is Social Security supposed to review your medical records to see if you're still disabled? If that were the case it would be a big deterrent to any attempt to return to work. I think, or maybe hope, that they are just talking about using employment records to determine whether a beneficiary's status under the work incentives.] 
  
• Notwithstanding any other provision of law, the Office of Personnel Management shall, upon request of the Commissioner of Social Security, expeditiously administer a sufficient number of competitive examinations, as determined by the Commissioner, for the purpose of identifying an adequate number of candidates to be appointed as Administrative Law Judges under section 3105 of title 5, United States Code. The first such examination shall take place not later than April 1, 2016 and other examinations shall take place at such time or times requested by the Commissioner, but not later than December 31, 2022. Such examinations shall proceed even if one or more individuals who took a prior examination have appealed an adverse determination and one or more 1 of such appeals have not concluded ...[This is strong pressure on the Office of Personnel Management to assure that enough Administrative Law Judge candidates are available to be hired by Social Security. Why do I suspect that this problem won't go away?]
  

Disability Trust Fund Numbers Released -- Why Don't We Just Make The Problem Go Away?

     The Social Security Administration has released the numbers on the operation of its Disability Insurance Trust Fund through the end of the second quarter of calendar year 2015. The Trust Fund stood at $50.8 billion as of the end of June. Here are some numbers showing how things have been going.

• The Disability Trust Fund lost $3.5 billion in the second quarter of this year compared to a loss of $4.1 billion in the second quarter of 2014. 
• The Trust Fund has lost $9.4 billion so far this year compared to a loss of $10.4 billion in the first half of last year.
• In the past four quarters the Trust Fund lost $29.2 billion, compared to a loss of $30.9 billion in the four quarters before that.

     The trend is clear. The Disability Insurance Trust Fund is losing money and will be exhausted in the not too distant future. However, it's not been losing ground as fast as it was. If the Trust Fund loses ground at the same rate as it has over the last year, it will barely limp into January 2017 before running out of money. If Trust Fund operations continue to improve as they have been improving lately, it will last a bit longer, until around the end of the first quarter of calendar year 2017. The only way you get the Trust Fund running out of money before the end of 2016, as Social Security's actuaries have done, is to project that the Trust Fund will start doing worse than it's been doing, which is certainly possible, but which seems unlikely at the moment.

     To remind readers, the Social Security Administration could dramatically change the prospects of the Disability Insurance Trust Fund, possibly preventing it from ever running out of money, by changing its position on benefit payments to those who are dually eligible for Disability Insurance Benefits and a Social Security Retirement or Survivors benefit. Now the dually eligible are always paid the Disability Insurance Benefit first and any extra benefit is paid out of the Retirement and Survivors Insurance Trust Fund. The statute doesn't require this. Reversing this doesn't require Congressional approval and doesn't affect any benefit payments either now or in the future. Why go through endless bickering and threats to disability claimants and recipients when it's easy to make the problem go away?

A Solution For The Disability Trust Fund?

     I've been looking into the question of what happens if Congress is deadlocked, as it may be, on a fix for the possible exhaustion of the Social Security Disability Insurance Trust Fund. I'm encountering some interesting issues. If we actually go over the precipice and the Disability Insurance Trust Fund runs out of money, it's going to be a mess. The shortfall in the Disability Insurance Trust Fund will vary from month to month since FICA collections vary from month to month. One or two months a year there may be little or no shortfall and some other months there may be a 30% or greater shortfall. There is also the substitution problem. I'll go into this in much more detail later but recipients of Disability Insurance Benefits (DIB) who are 62 or older are also entitled to Retirement Insurance Benefits (RIB). They don't get paid both, just the higher amount. Normally, the DIB is higher than the RIB but if the DIB is reduced because the Disability Insurance Trust Fund is short of money, the RIB will often be larger. That would be a messy computational problem since the number of people affected by this would vary from month to month and because shifting them to RIB would itself have an effect upon the amount available to pay everyone eligible for DIB. I'm sure that computers could solve this problem but it wouldn't be easy since the computers have never been programmed for the task and the agency isn't brimming with computer programmers who have nothing else to do.
     What I wonder is whether Social Security could start routinely charging benefits in a dual eligibility situation first against the Retirement Insurance Trust Fund and only paying the difference out of the Disability Insurance Trust Fund. That would significantly reduce the amount paid out of the Disability Insurance Trust Fund.
     The interesting thing is that the Social Security Act really doesn't speak to the question of how benefits are to be charged between the Disability and Retirement Insurance Trust funds when a claimant is dually eligible. To this point, normally 100% has been charged to the Disability Insurance Trust Fund but I don't think the statute requires that result. This is the closest that the Social Security Act comes to dealing with the issue:

42 U.S.C.A. §402 ...

(k)(3)(A) If an individual is entitled to an old-age or disability insurance benefit for any month and to any other monthly insurance benefit for such month, such other insurance benefit for such month ... shall be reduced, but not below zero, by an amount equal to such old-age or disability insurance benefit (after reduction under such subsection (q) of this section)....

(k)(4): Any individual who, under this section [which has to do with benefits paid from the Retirement Insurance Trust Fund] and section 423 [DIB], is entitled for any month to both an old-age insurance benefit and a disability insurance benefit under this title shall be entitled to only the larger of such benefits for such month, except that, if such individual so elects, he shall instead be entitled to only the smaller of such benefits for such month.

     This section uses the word "entitled" in contradictory ways. It first talks of a person being "entitled" to both RIB and DIB but then says that such a dually "entitled" person is only "entitled" to one benefit. How can you be dually "entitled" if you're only "entitled" to one benefit? The only reasonable way to interpret this is that that the word "entitled" was used in two different ways, which is poor legislative drafting but we have to deal with the statute as it is. At first, the word "entitled' is used to mean "eligible for" but at the end it is used to mean "paid for." The intent is that a person does not receive both the RIB and the DIB, only the higher of the two benefits even though he or she is technically entitled to both.
     Because the most the claimant can receive is the higher of the two benefits, does that mean that the benefits must be paid 100% out of the trust fund of the higher benefit? I don't think the statute speaks to this question. The statute speaks to how much the claimant is paid, not how is charged against each trust funds.
     When Social Security first started to implement this provision, mainframe computers were in their infancy. All of Social Security's computers at that time put together probably had less computing power than my cell phone does today. In the late 1950s, splitting the benefit payment between two different trust funds might have required manual computation on a case by case basis. The simpler thing to do was to charge the benefits solely against the Disability Insurance Trust Fund.
    One might think that if an individual is paid reduced RIB before their full retirement age that they must receive reduced RIB for the rest of their life but that's not the way Social Security's has interpreted the Act. To the best of my knowledge, there's only one situation now in which the dually eligible are paid the RIB first. That's done where a person eligible for DIB is over 62 and has a workers compensation offset. The workers compensation offset would reduce the DIB but not the RIB. The claimant can take the early retirement benefit. We call this the RIB-DIB election. The retirement benefit is 25% less per month than the full DIB but in most cases it's still more than the DIB would be after the workers compensation offset. After a claimant who has made the RIB-DIB election reaches full retirement age, they're no longer subject to the 25% reduction in their retirement benefits because they went on early RIB. The dual eligibility eliminates the 25% actuarial reduction. This has been Social Security's practice for decades.
     If you're not really familiar with Social Security law, you might object that there's no way a person can be dually eligible for DIB and RIB without filing a claim for each benefit. However, this objection is easily dealt with. The claim form for DIB says at the top: "I apply for a period of disability and/or all insurance benefits for which I am eligible under Title II and Part A of the Social Security Act, as presently amended." Thus, a claim for DIB is also a claim for RIB. But what if the claimant was ineligible for a retirement benefit at the time he or she filed the claim for disability benefits because he or she was less than 62 at the time? The Social Security Act says:

42 U.S.C. §402(j)(2): An application for any monthly benefits under this section filed before the first month in which the applicant satisfies the requirements for such benefits shall be deemed a valid application (and shall be deemed to have been filed in such first month) only if the applicant satisfies the requirements for such benefits before the Commissioner of Social Security makes a final decision on the application ...

     If a claim for DIB is also a claim for RIB and there has been no "final decision" on that RIB application, there's no problem with saying that the RIB claim remains alive and can be acted upon at a later date. The award certificate issued at the time a DIB claim is approved does say "This benefit is the only benefit you can receive from us at this time" but that's hardly a final determination denying a retirement claim. What I'm suggesting here is Social Security's practice. When a person who is drawing DIB reaches full retirement age, Social Security doesn't waste time contacting him or her to take a claim for RIB. The claimant is automatically transferred to RIB since they filed a claim for RIB at the same time they filed a claim for DIB. (By the way, there's an interesting technical question about whether a person remains entitled to DIB after achieving full retirement age but let's leave that issue for another day.)
     The bottom line here is that this is simply a question of how one construes statutory language that's a lot less than crystal clear. When the statute uses the key word "entitled" in two different ways in the same sentence it's hard to say there's any plain meaning to that sentence. I don't think that what I'm talking about does any violence to the Social Security Act. It's just an interpretation. I won't belabor it but I've looked at the legislative history and I didn't see anything that explains how Congress intended that benefits would be charged to differing trust funds in dual eligibility situations.
     What I'm suggesting can be done without changing any of Social Security's regulations since they don't speak to the issue. All that would be required would be some minor changes in Social Security's POMS manual, some changes in Social Security's bookkeeping programs which probably wouldn't be that difficult since something close to this is already being done when there's a RIB-DIB election, and a press release.
     If Social Security did this, could Congress or someone else sue and get it overturned? They could try but they would have a real standing problem, that is, the Courts would ask, in effect, "Who are you to sue over this? How have you been affected?" Merely saying "I don't like what you're doing" or "I think what you're doing is illegal"  or "I'm a member of Congress" or "I'm on Social Security retirement benefits and maybe someday this will make the Retirement Trust Fund run out of money" probably won't enough to give one standing. Even if a Plaintiff gets past the standing issue, they have to get past an even bigger problem, the deference required under the Chevron doctrine for an agency's reasonable interpretation of a statute. Is the interpretation I'm suggesting unreasonable or is it just one of at least two possible interpretations of an ambiguous statute? This wouldn't be easy to challenge.
     Congress could try to pass a bill blocking this interpretation but such a bill could be filibustered in the Senate or vetoed by the President.
     There's a real problem that I haven't discussed so far. It may not be enough to solve the Disability Insurance Trust Fund's problem. The predicted shortfall in the Disability Trust Fund under the Intermediate projection is about 20% while only 24% of DIB payments are made to those between 62 and 66 (doublecheck my math since the only figures given are the number at each age and the average benefit amount for each age). However, paying the RIB first still leaves the Disability Trust Fund responsible for at least 25% of the total benefit paid for claimants who go on disability benefits at or before age 62. If they go on disability benefits after they turn 62, the reduction is less. However, what I've talked about so far isn't the only dual eligibility situation. There are other claimants who are eligible for DIB plus one or more other benefits paid out of the Retirement and Survivors Insurance Trust Fund, such as widows and widowers benefits, husbands and wives benefits, mothers and fathers benefits and disabled adult child benefits. I doubt that those other dual eligibility situations would completely take up the slack but I just don't know. I don't think anyone will know unless Social Security's actuaries run the numbers. Also, the Intermediate projection for the Disability Trust Fund is just that, a projection. Last year and so far this year, the numbers are a bit better than the projection. Even a modest improvement over the projection might be enough. Of course, any worsening of the numbers would take things in the opposite direction. There's also the issue of whether any change would be applied only prospectively. If the change I'm suggesting were applied retrospectively, even for a few years, the change in the Disability Insurance Trust Fund balance would be dramatic.
     I can't say what the political effects would be if Social Security did this. Certainly, Congressional Republicans would protest but I don't know if even Fox News could get traction on this issue. It's so damned technical. I wonder how many readers have gotten this far in reading this blog post and can really follow what I'm saying. I wonder if Congressional Republicans would even be unhappy if this issue was taken off the table. It's not like it's an issue that their base really cares about. The ideas they have put forward so far on the Disability Insurance Trust Fund seem vague and confused.
     I hope the Administration has the audacity to do this. The Disability Insurance Trust Fund may not be at the top of the agenda for the President or Congress at this moment but a year from now it probably will be. If you think about what a mess it will be if the Disability Insurance Trust Fund runs out of money, what I'm suggesting may start to sound reasonable.

Shouldn't They Ask What The Claimants Want?

     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.

Maybe They Didn't Have Any Other Income

     A recent study reveals four reasons why people start taking Social Security retirement benefits early, passing up the higher monthly benefits they could receive by waiting:

• Fear of loss. People who have a stronger aversion to financial loss also tended to say they would claim earlier.  To them, the researchers said, a delay in receiving their benefit checks “looks like a potential loss.”
• Life expectancy. It’s intuitive that an individual who doesn’t expect to live as long might want to start his benefits as soon as possible, and that’s what the analysis concluded.  The researchers found that 10 years added to one’s life expectancy will delay a Social Security filing by six months.
• Fairness.  The individuals surveyed were asked whether they agreed with several statements about Social Security, such as “I feel that I have earned these retirement benefits.”  The more strongly an individual agreed with such statements, the more likely they were to say they would file for their benefits early.
• Patience. This finding was self-explanatory: the more impatient an individual, the more likely he is to claim early.

Tough Sledding At The Supreme Court

     It sounds like it was tough sledding at the Supreme Court for the attorney arguing for Social Security children's benefits for twins conceived after the death of their father using frozen sperm.

Social Security Timing Software

A press release:

Senior Market Sales, Inc. today announced the launch of its new patent-pending Social Security Timing™ software, which helps married retirees uncover tens of thousands in additional Social Security benefits they may have otherwise left on the table.

“Whether to elect Social Security early or late is a decision virtually every retiree is faced with,” said Joe Elsasser CFP, Director of Advisory Services for Senior Market Sales and the software’s creator. “Social Security Timing™ is the only software in the marketplace that simultaneously calculates all whole year election age combinations across nine possible election strategies in order to identify the strategy that offers the highest lifetime benefit.”

Social Security Timing™ has two components that help retirees make better choices. One is the free “What’s at Stake?” consumer calculator, which allows married couples to find out in real dollars the difference between their best and worst possible Social Security election decision. The calculator also shows their top three election strategies and gives them the option to consult an advisor for further guidance. The second component is the Social Security Timing™ software that financial advisors can purchase to use with their clients.