Social Security - Know What to Expect

[imnontrad]

Unfortunately, not all SSA employees have the same level of expertise. We have many posts at the "Social Security Intelligence" Facebook group where someone has been told incorrect information.
It is always good to be proactive in ensuring that you receive the correct SS amount.

 

[New Thinking]

Six Months

Larry Kotlikoff has written that many filers are “defaulted” into a six month retroactive lump sum. I wonder if they were doing that and quoting a 69 1/2 year claim?

 

[RASAP]

I talked with our local SS office and as it stands right now, they have confirmed there is a mistake in my benefit amount. They have forwarded information to the "higher-ups" (my word - not theirs) and told me I should get a response within 30 days. Keeping my fingers crossed.

 

[imnontrad]

Larry Kotlikoff has written that many filers are “defaulted” into a six month retroactive lump sum. I wonder if they were doing that and quoting a 69 1/2 year claim?

The option to file up to 6 months retroactively is available to all after they pass their Full Retirement Age. But in many cases this is not good because it backdates/lowers the SS amount.
The SSA employee is obligated to present this option to anyone who files after their FRA and unfortunately, the person is not educated on the pros and cons of doing this.

Sometimes when it might be a good strategy -
You have gotten a life limiting diagnosis and you have no spouse or your spouse has a higher SS benefit
You have reached 70 1/2 and used this to "push" the income into a different tax year
You have a large expense and getting this lump sum would make it possible to NOT get a high interest loan or sell equities when the stock market is low
You have a spouse with a higher SS benefit and will most likely die before you (and then you transition to the higher "surviving spouse" benefit).
You are financially independent anyway and it makes no difference (unmarried or spouse with a higher benefit)

 

[Buckeye]

I talked with our local SS office and as it stands right now, they have confirmed there is a mistake in my benefit amount. They have forwarded information to the "higher-ups" (my word - not theirs) and told me I should get a response within 30 days. Keeping my fingers crossed.

Wow! Definitely keep us updated.

 

[JoPeter57]

Since you are past FRA, does the Delayed retirement credit (DRC) come in to play? I don't fully understand the DRC, but I've read that your "lost" money is made up the first January after you start collecting.

 

[xlf11]

Since you are past FRA, does the Delayed retirement credit (DRC) come in to play? I don't fully understand the DRC, but I've read that your "lost" money is made up the first January after you start collecting.

This is true for between FRA and age 70. Once you hit 70, you should get full benefit of DRC.

 

[2retireearly]

mysocialsecurity pages

I can't see where you answered if your number has been matching what you have been seeing either on the mysocial pages or in the past mailings? So many of us have been looking at those numbers given to us, for years. I have always verified my earning were correct, and even though I made my living doing actuarial math and programming, I assumed the Benefit amounts were right, for 62, FRA and 70. For you, were they? Why would your question of the age 70 benefit amount only come up now?

 

[RASAP]

Everything has tracked to my expectations ever since I quit working several years ago. Even now, I completely agree with what SSA says is my 2021 PIA. The glitch is (as I understand it) that when you multiply my 2021 PIA by 1.32 (I turned 70 on May 10) it does not equal the benefit amount they say I will get. The middle two digits in the amount I am expecting have been transposed resulting in $270 less. Even my local SSA office (after looking at my account) believes there is an error and that it appears it is due to the transposed digits. We shall see.

 

[2retireearly]

Ah, I got it. But I only get it if your FRA was 66. Was it? If not then I won't get .32.

You say you agreed with your printout Benefit at your FRA , and you agreed with its projection of age 69. So to get the projected (and now reality) age 70, you took the age 66 FRA times 2/3 times 12 times 4 years /100 to = .32
So very disheartening. And there is no way they manually typed in any of these numbers, to use in a calculator (on their desk!..ha!), so using the simple calculation variables, in the huge social security program, I wonder how could your number be so wrong, and if so how could other people's not be wrong? Scary, huh?

 

[RASAP]

I was born in 1952 (turned 70 this month) so yes, my FRA was 66. It is a mystery to me too because, I agree that is seems highly unlikely that there is any manual typing of numbers. This is what worries me. However, even with my conversations with multiple SSA agents, I have all of them scratching their heads over this as they too see the 3962 number in my records and have no idea why my reward letter indicates 3692.

 

[2retireearly]

I was born in 1952 (turned 70 this month) so yes, my FRA was 66. It is a mystery to me too because, I agree that is seems highly unlikely that there is any manual typing of numbers. This is what worries me. However, even with my conversations with multiple SSA agents, I have all of them scratching their heads over this as they too see the 3962 number in my records and have no idea why my reward letter indicates 3692.

Possibly the letter was hand typed...which is what was done before 1975...so that's odd too. Or possibly the software used to create the letter, has a program bug. So I'm going to assume, it is just the letter that is wrong. that the 'real' amount, is the 3962 and that is the number you will be getting. This is interesting, and reminds me of the many issues we had at work, not a govt company, but a huge insurance company. Ahhh...memories...

 

[RASAP]

Unfortunately no. When I go online to my mySSA.com account, the number is 3692, not 3962 (the June payment is available online now).

 

[2retireearly]

Well...the plot really thickens...makes NO SENSE!!! Keep us informed of the final outcome.

 

[Koolau]

Larry Kotlikoff has written that many filers are “defaulted” into a six month retroactive lump sum. I wonder if they were doing that and quoting a 69 1/2 year claim?

Yeah they tried that with me. When I asked them about it (this was all in person - before Covid) they tried to make it sound like it was free money. I pointed out that they couldn't give me 6 months of SS payments and not lower future payments. "Well, yeah, that's right, but most folks are doing it this way." Of course, most folks just take the money and run, so I could see how they pull it off. YMMV

 

[RockLife]

I wouldn't expect a human to enter any numbers in regard to your benefit. I'd rather think it's an error in a prior calculation or a misunderstanding. However given it's our government I guess it could be a human typing crapola in old green screens but I really don't believe it.

It is pretty unbelievable, but not entirely. Have you been to a government website lately? They are generally so bad that I worry for our country's cybersecurity. Surely we have people who can write code better than what's at say, https://www.eftps.gov/eftps/ right? Right?

 

[Sunset]

I was born in 1952 (turned 70 this month) so yes, my FRA was 66. It is a mystery to me too because, I agree that is seems highly unlikely that there is any manual typing of numbers. This is what worries me. However, even with my conversations with multiple SSA agents, I have all of them scratching their heads over this as they too see the 3962 number in my records and have no idea why my reward letter indicates 3692.

Seeking some clarification.
Did you look at your statements each year, and do they not show the correct amount for FRA and age 70 , so it's the letter and later calculations that were wrong ?

Or has the age 70 number always been wrong in the statements ?

 

[RASAP]

I have been collecting spousal benefits for several years while waiting to turn 70. Ever since then, I no longer receive statements for my account. As I said previously, I completely agree with my PIA for 2021 that they have quoted me on 3 separate occasions ($3001. 60). And based on that PIA and the fact that my FRA was 66 and I waited until I was 70 years old, my benefit should be 3001. 60 * 1.32 = 3962, not 3692 (unless my above assumptions are incorrect).

 

[RASAP]

Here is the first page from the AnyPIA app downloaded from the SSA website. It is the current version and I have triple checked the earnings entered against the earnings as shown on the SSA website.

Wed Jun 01 13:52:47 2022
Summary of results

Name: RASAP

Social Security number: XXX-XX-XXXX
Sex: male
Date of birth: May 10, 1952
Retired in May 2022 at age 70 and 0 months
Full retirement age: 66 and 0 months
Early retirement age: 62 and 1 month

Wage-Indexed Formula (1977 Act)
PIA = 3,001.60
MFB = 5,254.50

Special Minimum
PIA = 950.80
MFB = 1,427.90

Indexed Monthly Earnings = 8,440
Primary Insurance Amount = 3,001.60
Number of months increment = 48
Delayed increment factor = 1.32000
Benefit before rounding = 3,962.10
Benefit after rounding = 3,962.00
Maximum Family Benefit = 5,254.50

 

[zaqxsw]

I understand that SS is supposed to include any DRC's once you hit 70, but I still bet that is the culprit. DRC's ARE NOT credited come the following January. It can take more than two years. I took SS in Oct. of 2021 at 67 1/2 and got credit for DRC's up to Dec. of 2020. I have 9 more months of DRC's owed to me. I don't expect to see them until maybe the end 2023, plus a lump sum making up the difference.

Per "Ask Larry":

" Do I Need To Remain Patient?

"My FRA is 66 (DOB: 11/12/52). I claimed my own benefits at age 67 & 7 months in July, 2020. I have been receiving the benefit reported in my benefit statement as of Jan. 1st, 2020. I understood the benefit would be adjusted on Jan. 2021 to reflect the additional seven months I waited to claim benefits. Upon my first call the representative said the adjustment would be made 6/1/ 21. Nothing happened. I called again in August and the rep. said they are understaffed and he did not know when they would get to this. Do you have any other info on this? This will result in a 4.67% increase. Will I receive a lump sum for the last 1+ year and an ongoing benefit adjustment? Do I need to remain patient and trust Soc. Sec. will eventually figure this out? Thanks"

ANSWER: Hi. Yes, you're going to need patience. If you start drawing benefits between FRA and age 70, Social Security initially only gives you credit for any delayed retirement credits (DRC) that you earned through December of the year prior to the year you start collecting. Any DRCs earned in the year that you start drawing are subsequently credited effective with your payment for January of the year after the year you claimed benefits.

You're correct that it sounds like you should receive a benefit rate increase effective with your payment for January 2021, but those types of recomputations are done using an automated procedure. My understanding is that such automated recomputations are only done every other year, so you may not actually see the rate increase until the latter part of 2023. You will, though, be paid any back pay due when the recomputation is processed.

By the way, we recently received feedback from someone who filed at age 68 in September 2019, and he reports that his recomputation to credit his 2019 DRCs wasn't processed until August 2021. He was also then paid the back pay that he was due retroactive to the beginning of 2020.

Best, Jerry

Category:
Delayed Retirement Credits
Posted:
Oct 8 2021 - 4:33pm "

 

[retired1]

Thanks for sharing. Yes it sure seems that someone swapped 6 & 9 digits which raises questions about system's calculation process. Is it manual or computerized ? If manual, we are in trouble !!

 

[SevenUp]

I understand that SS is supposed to include any DRC's once you hit 70, but I still bet that is the culprit. DRC's ARE NOT credited come the following January. It can take more than two years. I took SS in Oct. of 2021 at 67 1/2 and got credit for DRC's up to Dec. of 2020. I have 9 more months of DRC's owed to me. I don't expect to see them until maybe the end 2023, plus a lump sum making up the difference.

You may not get the full lump sum you might reasonably expect.

SS benefit "loss" if begin after FRA, but before 70 - Bogleheads.org and Bogleheads® Live: Submit ?s for Mike Piper on Social Security - Bogleheads.org both include pertinent comments on this issue.

 

[oldtimer]

Since you are past FRA, does the Delayed retirement credit (DRC) come in to play? I don't fully understand the DRC, but I've read that your "lost" money is made up the first January after you start collecting.

I agree with SevenUp's reply above. "Lost" money for the months in the year you started SS in a month after January will not be paid to you - it is lost. However your next January benefit will be increased for the DRC earned after last January to when you started SS.

 

[RASAP]

Thanks for pointing me to the DRC/DRB issue. Does this really apply to me since I applied for benefits for AFTER age 70?

In what zaqxsw posted the key phrase seems to be "If you start drawing benefits between FRA and age 70".

In the link SevenUp provided, once again it says "SS benefit "loss" if begin after FRA, but before 70".

I also found this link with the following: "Your delayed retirement credits will appear in your benefits check in January of the year following the year in which they were earned or when you reach age 70, whichever comes first.

Hummm - I applied in February (69 years 9 months) for benefits to start in May (70 years 0 months). Could it be that since I APPLIED 3 months early that my benefit amount was affected? My December 2021 DRC factor would be 1.29. Calculating my year end DRB would then be $3001.60 * 1.29 = 3882. Still nowhere near 3692. In April of 2021 my DRC was 1.23 which comes out to 3692 (bingo!) but I have no idea what would be unique about April 2021.

 

[zaqxsw]

I also found this link with the following: "Your delayed retirement credits will appear in your benefits check in January of the year following the year in which they were earned or when you reach age 70, whichever comes first.

Not correct. My still outstanding DRC's were earned in the first half of 2021. They did not show up in January 2022, nor have they shown up since. I firmly believe they are not "lost", there just isn't any logic around when they will show up.