As many as 9,224 widows and widowers aged 70 and up have been underpaid beneficiary benefits for years — at a cost to them of nearly $132 million in lost benefits, according to new report.
The report from the Inspector General of the Social Security Administration (SSA) raises concern that many retirees fail to understand their own benefits.
Worse, many more people may be receiving less benefits than they are due from the retirement system.
The report showed that SSA employees were advising people under retirement age to delay their own retirement benefits while accepting widow or widower benefits.
Those recipients could have accepted pre-retirement age benefits while accepting beneficiary payments. The decision to do both would have increased overall benefit amounts.
Recipients who delayed benefits until after retirement age stand to lose $5,185 annually. The underpaid benefits amounted to $131.8 million dollars, reports the IG.
The bad advice dated as far back as 2011, if not further.
The report also estimates that the SSA will further underpay 1,889 beneficiaries annually by almost $9.8 million before they turn 70.
Receiving erroneous advice concerning SSA benefits may be more common than believed.
The Inspector General’s office believes that more than 11,123 recipients may currently be eligible for increased monthly benefits.
“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,” said the report.
Business as usual?
The report found that SSA employees has no operational infrastructure to correctly inform recipients.
“We also found that SSA did not have controls in place to alert its employees when they should inform widow[er]s of their option to delay their applications for retirement benefits.”
Offering erroneous advice or withholding such information may also be SSA operational procedure. So argues Joe Elsasser, president of Covisum, a provider of Social Security timing software.
Elsasser explained that divorced widows are particularly prone to information withholding, especially divorced widows unaware of deceased spouses.
“We see that sort of situation a lot, where a divorced spouse doesn’t have any idea what is available or what could be available based on their ex’s record,” he told CNBC.
Elsasser explained that receiving correct answers depend on whom you ask and how you ask questions.
“If I call Social Security and ask about my ex’s benefit record, they’re not allowed to tell me much,” Elsasser said.