Safeguarding Retirees from Getting Cheated out of Their Social Security Payments

October 14, 2016

Safeguarding Retirees from Getting Cheated Out of Their
Social Security Payments

by Larry Klein, Publisher, the Retirement Income Blog

"Every year, people leave tens of billions of dollars on the table in terms of money that they're entitled to, they could get if they made more informed claiming decisions about Social Security."

Phil Moeller, co-author Get What's Yours: The Secrets to Maxing Out Your Social Security.

"Americans leave $10 billion in unclaimed spousal benefits on the table each year."

Laurence Kotlikoff, professor of economics at Boston University, co-author Get What's Yours: The Secrets to Maxing Out Your Social Security.

"Americans leave roughly $25 billion dollars in unclaimed Social Security benefits on the table each year."

Boston College, Center for Retirement Research

While I do not know the precise dollar amount that retirees unintentionally sacrifice (because of unfortunate decisions on their part) involving Social Security (SS), the sum is still a lot of money.   Sadly, most people do not even know that the information they get from the Social Security Administration (SSA) is wrong, outdated and insufficient.

Most SS claimants are unaware that there are 12 different SS benefits they are eligible to collect:  parent benefits, child benefits, spouse benefits, widow benefits, divorce benefits for spouses and for widows, etc.

The ignorance of how to get the largest SS benefit is widespread.  For example, a survey by AARP and the Financial Planning Association reported that 75% of the people polled did not know the following:  as long as you were married for at least 10 years, you can collect SS benefits based on your ex's work history after you're divorced.  Consider how many people this impacts, given that the divorce rate has been as high as 41% (not the often quoted 50%).

You likely expect to get correct advice when you visit the SSA to file for benefits. But not many workers for the SSA know the 2700+ rules for claiming SS.  They also don't know how to advise you to get the largest benefit.

The Government Accountability Office found in its review of SSA, 1/3 of the workers did not advise claimants how to get a larger monthly benefit by waiting to claim at an older age. Benefits increase 8% every year you wait to claim. So a person claiming at age 64 and advised to wait until age 66, as an example, would get 16% more monthly, for life.  Apparently, some claimants don't know this and are not being informed of this very simple fact.

In many meeting with claimants, SSA workers explained how the claimant could get 6 months of retroactive benefits.  Here's an example.  Suppose you reach full retirement age in March 2016 and you are fully insured (for those born 1943-1954, full retirement age for SS purposes is 66). You do not file an application for retirement insurance benefits until March 2017. In this case, you may be entitled to benefits retroactively, beginning with the month of September 2016 (six months before you filed an application).  However, in only 10% of the meetings where the SSA worker mentioned the retroactive benefit did they warn that taking the retroactive benefit would reduce future monthly payments, for life.

Consider that the incomplete or even wrong information takes its biggest toll on the poorest seniors, those most dependent on SS for the majority of their income.

There are so many opportunities to make an error in the way you file for SS.  How can you know if you're making the best choice?  Here are several solutions.

Consult an Expert

If you want to be told what to do by an expert, there are some sites that list advisors who are knowledgeable. Do not assume that your existing financial advisor knows the intricacies of SS.  Most do not.  Those who want to offer this expertise to their clients have taken specialized training.

These advisors have been through the training provided by the National Social Security Association, a for-profit company which trains advisors to be knowledgeable about SS choices

These advisors have been through the training from the Corporation for Social Security Claiming Strategies, a for-profit training company.

These advisors have completed the Retirement Income Certified Planner course given by the American College, a non-profit college primarily serving insurance professionals.

These are advisors who use Social Security Timing software for calculating the optimal SS choice.

Online Services

These services provide a plan on how to maximize your SS benefit either online, over the phone or combination of both.

Do-It-Yourself Software (also has an option to get help from an advisor)

Some of the online software is free to use but please be cautious.  My advice is to use the free tools and then pay for one of the online analyses (less than $50) or consult with a trained advisor.  If you have 2 or 3 sources giving you the same advice, there's comfort in that.

If you have started your SS benefits within the last 12 months and fear you may have made a mistake, you can change your choices.  Get the correct choice using the resources above and refile with the SSA. Note that you will need to repay any benefits you have received.

If you are beyond full retirement age (e.g. 66) and realize that you would have been better off waiting to claim benefits at an older age, you can suspend your benefits and restart later.

It is not known how many people receive less than their fully entitled benefit. Make sure your friends read this post: share it on Facebook, Twitter and other social accounts.


Larry Klein is the founder of, a leading resource for news and analysis about personal finance, retirement planning, economic developments and related matters. A retired CPA and financial advisor, Larry holds an MBA from Harvard.

NOTE: The views expressed in this Guest Blog are those of the author and do not necessarily reflect those of Blog.