You can’t trust the Social Security Administration to give you the straight scoop on claiming strategies, says William Meyer, author and Social Security software developer.
One of the biggest decisions a person will make in his financial life will be the type of Social Security claiming strategy he takes, but administration personnel are not properly trained to sniff out the exact policy that helps people get the most money, Meyer says.
“In fact, around 70 percent of Social Security recipients could be getting more money than they are.”
Meyer is the founder of Social Security Solutions, an information source on Social Security. Its offerings include research and planning tools and SSanalyzer.com.
He has also testified before the U.S. Senate Special Committee on Social Security and retirement issues. He and William Reichenstein, who holds the Pat and Thomas R. Powers Chair in Investment Management at Baylor University, have written several books on Social Security strategies together.
“Financial advisors frequently send their clients to the Social Security office to claim benefits in line with their financial plans, only for the clients to be told by a Social Security agent that they cannot implement the strategy they want,” Meyer says. “And frequently, the Social Security agent is wrong.”
For instance, a recent change in regulations eliminated a strategy called “file and suspend.” Under this strategy, one spouse used to be able to file for his benefits but then suspend them, allowing the benefits to continue to grow by 8 percent a year until he was age 70. With one spouse filing, but then suspending benefits, it allowed the other spouse to claim spousal benefits.
This strategy was recently eliminated. But regulations still allow a full-retirement-aged recipient to suspend his benefits after he has started them in order to allow the benefits to grow by about 8 percent each year until he’s age 70. This might be done if a person's circumstances changed after he started receiving benefits.
“File and suspend so your spouse can collect is not the same thing as voluntarily suspending your own benefits so they can grow,” Meyer points out. “Social Security is incredibly complicated. That’s just one example," he says. The Program Operations Manual System, the reference guide for Social Security rules, has thousands of regulations in it.
“Problems arise because the Social Security agents do not have the right tools and are not properly prepared to give the right information to the tsunami of baby boomers coming to them,” Meyer adds.