Chris Stein, CFP®
Recommended Improvements to Social Security Claiming Process
Social Security Claiming Process
In September of 2016 the U.S Government Accountability Office (GAO) released a report on the Social Security claiming process. They identified many deficiencies and also recommended some changes to the process to help people make more informed decisions about Social Security. I am going to highlight the key findings; however you can view the entire report here: http://www.gao.gov/assets/680/679747.pdf
The GAO observed 30 in-person claims at SSA field offices and found that claimants were not consistently provided key information that people may need to make well-informed decisions. For example, in 8 of 26 claims interviews in which the claimant could have received higher monthly benefits by waiting until a later age, the claims specialist did not discuss the advantages and disadvantages of delaying claiming. Further, only 7 of the 18 claimants for whom the retirement earnings test could potentially apply received complete information about how the test worked. SSA’s Program Operations Manual System (POMS) states that claims specialists should explain the advantages and disadvantages of filing an application so that the individual can make an informed filing decision.
Improving the Claiming Experience
Lack of knowledge about this complex program leads to many people missing out on benefits to which they are entitled. As we have discussed in previous posts, the rules are so complex that even the SS field office personnel often get the rules wrong. In order to improve the claiming experience for people, the GAO proposed the following changes;
To ensure the information given by the representatives is consistent with POMS (the rule book) the SSA should ensure:
when applicable, claims specialists inform that delaying claiming will result in permanently higher monthly benefit amounts, and at least offer to provide claimants their estimated benefits at their current age, at FRA (unless the claimant is already older than FRA), and age 70; and
claims specialists understand that they should avoid the use of breakeven analysis to compare benefits at different claiming ages.
To ensure claimants are making informed decisions about when to claim benefits:
when applicable, claims specialists inform claimants that monthly benefit amounts are determined by the highest (indexed) 35 years of earnings, and that in some cases, additional work could increase benefits;
when appropriate, claims specialists clearly explain the retirement earnings test and inform claimants that any benefits withheld because of earnings above the earnings limit will result in higher monthly benefits starting at FRA;
claims specialists explain that lump sum retroactive benefits will result in a permanent reduction of monthly benefits. For the online claiming process, SSA should evaluate removing or revising the online question that asks claimants to provide a reason for not choosing retroactive benefits; and
the claims process include basic information on how life expectancy and longevity risk may affect the decision to claim benefits.
These recommendations by the GAO should help with the Social Security claiming process, but the process itself can still be complex. If you would like some help with claiming your Social Security, please feel free to contact us.
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