Terry’s Columns Social Security — Trust but Verify

Social Security — Trust but Verify

By Terry Savage on August 31, 2022

As millions of Baby Boomers make Social Security decisions, it’s every more important that they have reliable information about the impact of their choices. And the sad Savage truth is that in even straightforward situations they are unlikely to get the right answers from Social Security representatives.

Take the actual case of a woman we will call Ellen – a reader who posted on my blog asking for help. Her husband had passed away recently. He had been receiving his Social Security benefits for several years. And she had also taken her benefits, although before her full retirement age.

Now Social Security was telling her that she wouldn’t get any survivor benefits because half her husband’s full benefit was less than her own full retirement benefit.

Ellen sensed she was being misinformed. After waiting weeks for an appointment to talk with a SS manager, she was given more misinformation.

At that point I reached out to Social Security guru, Boston University economist Laurence Kotlikoff, author of the best-selling (and recommended in a previous column here) Money Magic. Kotlikoff has been focusing on Social Security decisions – and errors – for more than a decade. In fact, he was so annoyed with the government, he created his own online service to give specific advice on benefits decisions.

The website, www.MaximizeMySocialSecurity.com, uses state of the art software to help people make correct timing decisions and uncover tens of thousands of dollars in additional lifetime Social Security income.

Kotlikoff has long advised that you cannot trust the benefits calculated by Social Security. H says:
“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.”

And my reader, Ellen, is a case in point. I’m going to give you her question as posted, to illustrate her situation:
I am recently widowed. I am age 65 and started collecting social security benefits early at age 63. My late husband, age 76 began collecting SS benefits at his full benefit age of 65. I was under the impression that if his benefit was greater than mine, I would receive his benefit amount when he passed. I contacted SS to advise them of his death and was told that I would only receive the greater amount if my benefit was less than 50% of his. My benefit is greater than 50% by $65.00 per month so I was told I am not eligible. I have never heard of that and can’t find any information to confirm what I was told was true.

I decided to turn to the experts at MaximizeMySocialSecurity.com. After a series of emails to confirm whether her husband took benefits at his full retirement age, and when Ellen started taking her own benefits (early), they concluded that the initial analysis by Social Security (no additional benefits) was totally wrong!

I won’t bore you with the details, but Ellen contacted Social Security three different times – using questions provided by Kotlikoff’s team. I was copied on those emails, and loved this one from Kotlikoff’s team: “In the unlikely event they repeat the error, ask them which section of POMS they’re basing their claims on and get back to us.” (POMS stands for Program Operations Manual System.) Ellen was diligent and had the backing of experts.

The end result says Kotlikoff: “They told “Ellen” that she’d get nothing on her first call, 85 percent of the right amount on her second call, and the right amount on her third call. Had she stopped after her first call, she could have never applied for widow’s benefits and lost a massive amount.”

Just how much would she have missed out on? Well, according to the Max calculations, if she had accepted the first answer from Social Security and received no widow’s benefit, Ellen would have missed out on $268,003 in deserved benefits (present value) by age 90!

Social Security decisions have a huge impact over the course of your life. It’s worth the $40 cost to run the decision software at www.MaximizeMySocialSecurity.com.

Whether you’re deciding on the impact of taking your benefits early versus waiting until age 70, or maximizing benefits for a couple, this is more than a simple math problem. And that’s The Savage Truth.



a personal
finance question