Call me crazy, but if I’m dealing with an employee of a company, who has been trained by that company, then that person should know their stuff and be able give me good information and good advice.
Well, that’s not the case when you deal with the Social Security Administration. I’ve told you in the past that Social Security’s Office of the Inspector General found bad advice from Social Security agents cost 9 million widow and widower beneficiaries almost $132 million. And that was just on the issue of Social Security Survivor benefits.
Bad advice can be costly. The CEO of Social Security Solutions says the difference between the best claiming strategies and the worst could be as much as $100,000 over the lifetime of a single person and $250,000 for married couples.
People who apply for Social Security benefits have been told they can get a lump sum payment equal to six months of their benefit. What they’re not told is that taking the lump sum option reduces the size of your Social Security check. It’s as if you’d applied for benefits six months earlier. The difference in the size of the check can be substantial over the life of the beneficiary, especially when cost-of-living adjustments are factored in.
Here’s one I’ve heard many times. “What do you mean I can collect Social Security on my ex-spouse’s work history? They didn’t tell me that.” It’s true. If you meet the guidelines and collecting on your ex would be a bigger check than on your own work experience you can collect on your ex.
If you plan on asking for advice or information from Social Security, ask, ask again, check the information and ask again. In a recent interview with financial columnist Terry Savage, Boston University economist Laurence Kotlikoff said, “At least half of what Social Security tells you is either dead wrong, misleading or incomplete. My rule is, never ask Social Security anything. Just tell them precisely what to do.”
Savage tells the story of a woman named Ellen whose husband died. A Social Security agent told Ellen she was ineligible for survivor’s benefits. Convinced the agent was wrong, Ellen scheduled a second appointment with a Social Security manager — and got more misinformation.
It wasn’t until Ellen contacted a website founded by Kotlikoff — MaximizeMySocialSecurity.com — and reached out to Social Security a third time that she finally got the right answer and the benefit to which she was entitled.
According to a Social Security fact sheet:
- Social Security is the major source of income for most of the elderly.
- Nearly nine out of ten people age 65 and older were receiving a Social Security benefit as of June 30, 2022.
- Social Security benefits represent about 30% of the income of the elderly. *
- Among elderly Social Security beneficiaries, 37% of men and 42% of women receive 50% or more of their income from Social Security. *
- Among elderly Social Security beneficiaries, 12% of men and 15% of women rely on Social Security for 90% or more of their income.
* *This information is from research released in 2021 using 2015 data. See this link for more information
With numbers like that, it’s important to get the right information. So, what do you do? Educate yourself. You need all the information you can get. For most people, when they apply for benefits on their own work history, that’s the Social Security check they’ll get for the rest of their lives. The only increases will come from annual cost-of-living adjustments which are supposed to keep you even with inflation, nothing more. If you want to maximize your Social Security benefit, do your homework, know your options and know the hidden traps and pitfalls that can limit what you receive.