Social Security Insecurity

 

Laurence Kotlikoff is perhaps the foremost expert on the Social Security system outside the Social Security Administration (SSA) itself (and likely more knowledgeable than most everybody inside that agency) and certainly the best known.  A Boston University professor of economics, he wrote Get What’s Yours—The Secrets to Maxing Out Your Social Security and for years has co-authored the “Ask Larry” column, answering questions submitted by readers about all things having to do with Social Security rules and benefits.

His book, first published in 2015**, is very entertaining but at the same time eye-opening.  Perhaps the most disturbing finding it revealed was that people at SSA gave the public the wrong answer to their questions about 40% of the time.  That is an abysmal record.  And scary.

In a recent article published by NextAvenue.org and reprinted in MarketWatch, Dr. Kotlikoff cited complaints he has been receiving from Social Security recipients about letters sent by the SSA demanding immediate repayment of thousands of dollars in alleged overpayments.  As he wrote in the article, the letters offer no explanation of how/why the overpayments occurred and offer no apologies.  “Hard as nails and as cold as ice” is how Kotlikoff characterized the SSA correspondence.

Judging from the complaints Kotlikoff receives, the demands for repayment can arrive as much as 20 years after the mistake was first made—meaning an accumulated overpayment could amount to tens of thousands of dollars.  But with no real idea of how their benefits were calculated in the first place and no explanation of the mistake, how does one go about appealing these dun letters?  How does one know the letter itself is not a mistake?

Interestingly, no one reports receiving a notice of underpayment of benefits.  To insist that mistakes run solely toward overpayments stretches believability.  Even past reports by the SSA’s Office of the Inspector General acknowledge at least a modest amount of underpayments.  In my own situation, I delayed receiving Social Security benefits and was thus due more than my “full retirement age” benefit (“delayed retirement credits”).  I am still waiting for that extra money.  I understand that I might still have another six to eight months to wait for that, as well as for repayment of an extra month’s Medicare Part B premium that was deducted from my benefits more than a year ago.  SSA is all in on taking back money that may or may not have been overpaid.  They are away from the desk when money is due the beneficiary.

One circumstance seems to pop up frequently in these cases.  Many complainants are subject to the Windfall Elimination Provision, or WEP, which reduces benefits to individuals with non-covered pensions (usually government employees) but who also qualify for Social Security benefits by virtue of another job that was covered by Social Security.

If you have a particularly complex Social Security benefits situation (e.g. subject to WEP, divorcee/multiple marriages, widow/widower benefits especially if minor or disabled adult children are involved, etc.) I suggest you obtain more than one opinion from SSA when applying for your benefits or even consult an independent specialist on Social Security benefits (or “ask Larry”). Open an account on the SSA website and check your history of earnings.  Ensure SSA has your annual earnings correct; it is the single most important factor impacting your level of benefits.  Document everything you do and what you are told and who you talked with.  And if, even after doing all this, you end up getting a letter trying to claw back some money already paid, call your congressman or U.S. senator.  SSA needs to be accountable.

Until next time,

Roger

** If you decide to read his book, be sure to read the revised version.  Just a few months after it was first published in 2015, Congress made some big changes to Social Security benefit rules that made a good portion of Kotlikoff’s advice in it outdated.  The latest edition corrects this.

 

“Here I am sending you out like sheep with wolves all round you; so be as wise as serpents and harmless as doves.”  Matthew 10:16 Phillips