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Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil; and he will answer as many as he can.
Reports of Social Security’s financial problems appear like clockwork, yet the agency’s enormous operational issues receive little attention. Long before 2034 – the currently projected year in which the program will run short of funds – the agency may cease to effectively serve the older and disabled Americans who depend on it for benefits that often are their only source of funds for housing, food and other necessities of life.
Several years ago, economist Larry Kotlikoff, PBS NewsHour economics correspondent Paul Solman and I began work on a book that we would later name “Get What’s Yours: The Secrets to Maxing Out Your Social Security.” In gathering information for the book, we spoke to many people who told us about the problems they faced trying to claim benefits, understand the program’s very complicated rules, and simply reach a Social Security representative who understood the program and had the time to explain it to them.
During this time, the Social Security Administration (SSA) refused to speak with us. It continued, as it does today, to issue self-congratulatory statements about how many beneficiaries it serves and the high levels of customer satisfaction it achieves in the regular opinion polls it conducts.
The impression the agency clearly wishes to create is that it’s doing a wonderful job, notwithstanding the inevitable problems experienced by a relative handful of folks among the 67 million people to whom it paid benefits last year.
We thought this was untrue and said so in our book. Overwhelmingly, readers and critics agreed. Now, courtesy of a recent investigation by the agency’s own watchdog and continuing reports from the Government Accountability Office (GAO), it’s possible to more fully document the scope of the agency’s failings.
The watchdog report is especially troubling. It was issued by the SSA office of inspector general (OIG) and involved the rules when applying for survivor benefits. In most claiming situations, people must apply at the same time for all eligible benefits. Social Security is supposed to calculate the higher of the two benefits and pay them this benefit. However, the rules for survivor benefits are different.
As our book noted, and as we’ve since hammered home countless times, widows and widowers have the option of either applying for their survivor benefit or their own retirement benefit. This choice can be worth lots of money. A person is entitled to their maximum survivor benefit at their full retirement age, which is now 66. However, their retirement benefit will not reach its maximum until age 70.
It often is a smart move for a person to take the survivor benefit at 66 and defer their retirement benefit so it can receive up to four years of delayed retirement credits. It would grow by 32 percent during this period and often will then be larger — perhaps significantly so — than their survivor benefit. Under SSA rules, the person can claim their retirement benefit at 70 and get this higher payment for the rest of their life.
This is how things are supposed to work. SSA representatives have a legal obligation to explain these rights to people claiming survivor benefits. But according to the inspector general’s report, the agency’s staffers have been consistently doing the wrong thing.
The report identified 13,564 people currently receiving benefits who had the option of filing for either their survivor or their retirement benefit. Now, even if Social Security was doing a good job, you’d expect at least a small percentage of mistakes, right? That, at least, is what the agency is always saying when someone catches it making an error.
The OIG looked at 50 of these situations in detail and found the agency had done the wrong thing not once or twice, but an astounding 41 times.
“Of the 50 beneficiaries in our sample, 41 (82 percent) were eligible for a higher monthly benefit amount had they delayed their retirement application until age 70.” the OIG report said. “These claimants had a higher widow(er)’s benefit when they applied for benefits; therefore, they should have limited the scope of their application and delayed their retirement application up to age 70 to increase their total monthly benefit amount.”
“However, SSA concurrently awarded widow(er)’s and retirement benefits and did not document the unfavorable filing decisions in its automated system,” the report explained. “We did not find any evidence SSA had informed claimants of the option to delay their retirement application when they applied for benefits, as required. We also found that SSA did not have systems controls in place to alert its employees when they should inform widow(er)s of their option to delay their applications for retirement benefits.”
The OIG instructed the agency to go back and review all 13,564 cases and determine if it needed to award higher benefits.
While it’s easy to throw stones at Social Security, it should be emphasized that a lot of its problems have been caused by the cumulative impact of years of underfunded agency operations. Expecting a sudden and sustained improvement of performance is simply not realistic.
According to a recent GAO report, about 170,000 people visit the 1,200 Social Security field offices every day, and 250,000 people call those offices. The agency’s national call centers handle 30 million telephone queries a year, and it mailed out nearly 250 million customer notices last year. This relentless activity has occurred even as the agency has turned to online services as the only feasible way for it to handle customer needs.
Here are a few other facts from that GAO report that I find extremely troubling. These are all verbatim statements.
The GAO called on agency leadership to focus on fixing these problems, as it has in reports dating back many years. Ironically, as its latest report was being released, GAO was also sending a letter to President Trump informing him that the agency had been without a permanent director so long that the actions of its temporary director have been unauthorized since last November.
Worker payroll taxes fund Social Security benefits but the agency’s operating budget comes from taxpayers and must be approved by Congress in each year’s federal budget. For reasons that defy common sense, Congress has been starving Social Security of funding even as demand for its services have soared due to rising baby boomer retirements. This situation is the fault of both parties.
Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail: firstname.lastname@example.org.