How Social Security Benefits Are Incorrectly Explained and What to Do About It

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Two recent reports have looked in depth at the workings of the Social Security Administration (SSA). Both have found — unsurprisingly — that SSA has some problems, and these problems directly affect a person’s Social Security retirement benefits.

The Government Accountability Office (GAO) published a report on September 14 that takes the SSA to task for failing to explain to people key details of Social Security rules that could affect their retirement benefits. GAO officials observed 30 in-person benefit claims applications in 7 different field offices.

In 8 of 26 interviews, SSA claims specialists did not discuss with applicants the advantages and disadvantages of delaying their benefits claims. Waiting to claim retirement benefits increases the monthly benefit once the payment starts. GAO investigators also found “widespread misunderstanding” about the availability of spousal benefits, how monthly benefits are determined, and how the retirement earnings test works. Information was also lacking on life expectancy and longevity risk.

The GAO noted:

Many eligible individuals claim Social Security retirement benefits at the earliest eligibility age, even though they would receive higher benefits if they waited until older ages. In order to make an informed decision about when to claim, people need to understand how various Social Security rules and other factors affect benefit amounts.

GAO made six recommendations for improving the dissemination of accurate information to claimants. Details are available in the full GAO report.

The second report on the SSA was released by the Center on Budget and Policy Priorities (CBPP) on September 12. This report focused on the SSA’s budget, and its title sums up SSA’s problem: “Social Security Administration Cuts Hurt Every State.”

Congress has cut the SSA budget by a total of 10% since 2010 (adjusted for inflation). The agency’s staff has been cut by 6% nationwide and in five states — Alaska, Iowa, Kansas, Nebraska, West Virginia — staff cuts have exceeded 15%. Staff cuts have led to a backlog of more than 1 million applicants and the SSA has closed 64 field offices since 2010. Inevitably, these cuts have caused services to decline in every state.

Putting the two reports together, the obvious question is whether or not the GAO recommendations would be solved by restoring SSA’s budget to 2010 levels. An honest answer is, “Maybe.” But without additional funds to administer Social Security, there is close to no chance that GAO’s recommendations can be realized.