Those Still Working Have A Lot Of Illusions About Retirement

     From the 2018 Retirement Confidence Survey (click on each image to view full size):

 

      Note in the first chart that 68% of those who haven't yet retired think that they will do some work in retirement but only 26% of retirees report that they are working. Note in the second chart the divergence between the age that people expect to retire -- 65 -- and the age at which they actually do retire -- 63.

OIG Report On Social Security's Nonwork Alien File

     From a recent report by Social Security's Office of Inspector General:    

The Social Security Administration (SSA ) issues nonwork SSNs to noncitizens who lack Department of Homeland Security (DHS) work authorization but have valid nonwork reasons for the SSNs [Social Security Numbers], such as to obtain a federally funded benefit that requires an SSN.

Section 414 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 requires that SSA provide DHS an electronic file, known as the Nonwork Alien File (NWALIEN ) that includes the SSNs, names, and addresses of noncitizens working with nonwork SSNs; the employer reporting the wages; and the earnings amount. Additionally, each year SSA is required to send a report to the Congress on the aggregate quantity of nonwork SSNs used to earn wages.

For Tax Years (TY) 2014 to 2016, SSA’s NWALIEN File included about 422,000 individuals who were assigned nonwork SSNs but earn ed about $50 billion in wages

In TY 1996, there were about 607,000 individuals working under nonwork SSNs. In TY 2016, that number decreased about 43 percent to 343,000 individuals. Further, about 80 percent of the employers in the NWALIEN files for TYs 2014 to 2016 may not have been aware their employees were not authorized to work because they had not registered to use E-Verify to confirm their employees’ employment eligibility. Moreover, since 2007, SSA was unable to provide the NWALIEN file to DHS because the data exchange agreement had expired and had not been renewed in 12 years.

Finally, based on our review of SSA’s records for two sample populations of individuals assigned nonwork SSNs with wages posted to the NWALIEN File for TYs 2014 to 2016, we estimate SSA

• erroneously placed 6,000 individuals on the NWALIEN file because staff did not update their work authorization status on the Numident when they provided the Agency with supporting evidence during the benefit claims process, and

• incorrectly assigned nonwork SSNs to 2,700 individuals who were U.S.-born citizens. ...

     This shows problems at Social Security but the bigger problem is employers not verifying authorization to work. If you're serious about reducing illegal immigration, you get serious about putting the burden on employers. Republicans want to build walls and punish immigrants but the more effective course, as well as the cheaper and more humane course, would be to concentrate on the employer side but Republicans don't want to restrict the supply of cheap labor or put additional burdens on employers. By the way, it may have sounded stupid when Mitt Romney talked about illegal immigrants self-deporting but he had a point. Make it nearly impossible for them to work in the U.S. and they go home.

A Professor Theorizes

     There’s a podcast out of the Wharton School of Business at the University of Pennsylvania about one professor’s theorizing about ways to convince people to work longer and delay starting their Social Security benefits. She wonders whether some lump sum bribe would work. 

     With fewer than 10% of people now waiting to age 67 to start drawing Social Security, I’m doubting this scheme would work. Health issues drive many, perhaps most, retirement decisions. People are much more into sufficing rather than maximizing income and wealth than this professor realizes. 

     Governments incentivize people to do some things and avoid doing others. This is an area where additional incentives seem over the top to me. Elderly poverty is certainly a problem but I don’t think this would be an appropriate or effective way of addressing the problem.

Minor But Interesting Development

     I'm noticing that some United States District Courts are now issuing opinions in adult Social Security cases which identify the plaintiff only by first name and last initial. It seems to be more than one Judge or District doing this. It’s being done to protect privacy. I'm sure that anyone who really wanted to could look in the Court's records and discover the real name. This would just protect privacy on Westlaw, the major online database of Court opinions. I just noticed it. I can't think it's been around long. It's not being done in any of the North Carolina Districts. Does anyone know where this started?

That's A Lot Of Payment Mistakes

     From a recent report by Social Security's Office of Inspector General:

When beneficiaries receive both DI [Disability Insurance] and WC/PDB [Workers Compensation/Public Disability Benefit], SSA [Social Security Administration] must reduce, or offset, their DI payments to ensure the combined amount of DI and WC/PDB does not exceed whichever is greater of (1) 80 percent of their average current earnings or (2) the total family benefits.

During DI claims processing, SSA staff should obtain WC/PDB information, verify WC/PDB payments, retain WC/PDB documents, and remind beneficiaries of their responsibility to report WC/PDB payments to SSA. SSA systems calculate DI payments based on WC/PDB information entered by SSA staff. Incomplete and inaccurate WC/PDB information can cause improper payments.

From 1 segment of the Master Beneficiary Record, we identified 4,558 beneficiaries awarded DI benefits in Calendar Year 2014 who indicated they had filed, or intended to file , for WC/PDB. From this population, we reviewed a random sample of 200 cases. ...

SSA did not always accurately determine WC/PDB offset during DI claims processing. Of the 200 cases in our review, SSA

• did not obtain sufficient information for 60 beneficiaries’ WC/PDB claims and/or payments before it processed their DI claims ;

• obtained sufficient WC/PDB information for 43 beneficiaries but did not accurately enter it into SSA’ s records ; and

• did not retain the documents that supported the WC/PDB information entered for 6 beneficiaries.

Additionally, SSA did not always provide required printed reminders to beneficiaries of their responsibility to report changes to their WC/PDB payments to SSA.

The insufficient information and inaccurate records caused SSA to improperly pay 25 beneficiaries $26 6,929—$207,941 in underpayments and $58,988 in overpayments. Based on these results, we estimate 11,400 beneficiaries were under- and overpaid $121.7 million because SSA did not properly offset their DI benefits when it processed their DI claims.

SSA subsequently detected the improper payments in 15 of the 25 cases after it processed the DI claim. In one additional case, SSA detected some, but not all, of the improper payments. For the remaining nine cases, SSA did not detect the improper payments. Although SSA found many of the improper payments, the errors that occurred when it processed the D I claims still had negative effects, including SSA’ s inability to recover some of the resulting overpayments. ...

     I don't know what the solution is. The workers comp offset is too complicated but I don't know how to simplify it without increasing unfairness. More staff would help. If there was some way of making state workers comp agencies report workers comp payments in a standardized way that would help but I fear that would just shift the mistakes to the state agencies. Things get complicated when cases get settled.
     By the way, I doubt that OIG was even looking at subrogation cases. Subrogation is where a claimant gets workers comp but later settles a third party claim. Let's say the claimant was in an on the job automobile accident. They get workers comp but sue the driver of the other vehicle. If they get a settlement or jury award, they have to pay back their workers comp. That means they should be treated as if they never received workers comp. The problem is that frequently the subrogation isn't reported to Social Security. I'm betting that claimants are underpaid in most subrogation cases, usually by tens of thousands of dollars and sometimes by hundreds of thousands of dollars.

COLA Estimated To Be 2.8%

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     The Senior Citizens League estimates that this year's Social Security cost of living adjustment (COLA) will be 2.8%, which would be the highest since 2012.

Report On Confirmation Hearing

     Federal News Radio is reporting on yesterday's confirmation hearing on Andrew Saul's nomination to become Commissioner of Social Security. It's a more complete summary than what I gave yesterday.

     The Federal News Radio piece doesn't go into it but don't think that if Andrew Saul is confirmed that he'll have to vacate his office on January 20, 2019. Although the term the Senate is considering at this point only goes through January 19, 2019, the Social Security Act allows a Commissioner to stay in office after his or her term ends until a new Commissioner is confirmed. Even if the Senate is controlled by Democrats next year and refuses to confirm Saul for a full term, he would be able to stay in office for the rest of Trump's term as President. By the way, if Saul is confirmed for a full term, he'll be 78 years old by the time he finishes his term. Maybe he'll be able to do it but that's not the sort of thing you can count on.

Saul Confirmation Hearing

     The Andrew Saul confirmation hearing has ended. There was no obvious opposition nor even any difficult questions. Saul promised to stay out of issues like privatizing Social Security. He couldn't be confirmed otherwise. Saul tried to downplay his association with the Manhattan Institute that has called for privatizing Social Security.

     One thing that concerns me is that Saul seemed to believe that his management abilities might improve backlogs at Social Security. It's understandable that he might think that. Usually, new Social Security Commissioners think the same thing. However, those backlogs, can't be managed away. They're caused by lack of operating budget. Believing that backlogs can be managed away got previous Commissioners in trouble. They came up with schemes that they thought would work wonders but which only made the problems worse. I may have to dig up some old posts describing what happened before but I think those who have been around a while know implicitly that the backlogs can't be managed away.

     In his opening remarks, the chairman of the Committee, Senator Hatch spoke about why only the nomination for the term ending January 19, 2019 was being considered. He said it was to avoid setting a precedent about confirming someone for a term that only begins in another Congress. The ranking member, Senator Wyden, however, promised that the Saul nomination for a full term would be taken up in the next Congress. I have no idea why he would make such a promise. I hope he got something in return. However, if Wyden is Chairman of the Committee next year, the nomination could still be derailed in other ways. At least I hope it would be. I don't see why Democrats would want Saul in that position until January 2025.