SSA benefits ripoff
Taking a chance that you or one of your staff might be able to answer a SSA benefit question for me.
In a Facebook group, a reader posed an interesting concept. He claims that when you are approaching 70 and are ready to start receiving SSA benefits, the claimant should wait for several months after the 70th birthday month. By doing so, you will receive additional SSA benefits. I know that delaying past your birthday will result in a back payment when SSA benefits do begin, but I do not understand how any additional benefits would be due or the benefit of the delay (I asked for clarification on his method, but did not get a response).
If you cannot answer my question, could you direct me to someone who could? The person cautioned against calling SSA as he says that triggers the date upon which you are requesting SSA benefits (my 70th birthday is 12/22)..
Terry Says
In a very strange twist, SS has been telling people to start a few months BEFORE their 70th birthday to be sure they get their benefits “on time.” In fact, that costs them 8% on their basic benefit because though they get a few extra months, their base check is lower for life. Wait until the month after you reach age 70 to apply for SS, so you don’t start getting benefits early — a costly mistake.
Economist Laurence Kotlikoff has written extensively about this issue.
Here is a story he wrote about a man who said SS was so “nice” to him that they offered to start his benefits just BEFORE age 70,and even give him 6 months of retroactive checks! Here’s what Kotlikoff responded:
“I’m not surprised,” I said. “Social Security has a long history of pushing people to take their retirement benefits too early.”
“But why is the benefit 6 percent lower?” asked Gene.
“Because waiting an extra year between full retirement age and 70 to collect your retirement benefit, raises it by 8 percent per year. So if you went in three months early, they surely treated you as not waiting till 70 in the first place and then, in giving you benefits six months in arrears, they pushed your retirement benefit filing date back another six months. That’s nine months in total. Nine months is three quarters of a year, so you lost three quarters of the 8 percent yearly benefit increase (called the Delayed Retirement Credit). This is how you got stuck receiving a 6 percent (three quarters of 8 percent) permanently lower retirement benefit.
“They never told me,” said Gene.
“I’m sorry,” I said. “I wish I had talked with you sooner.”
Tell your friends on that Facebook page to make sure they don’t start benefits even one day before reaching age 70!
