A full 82% of widows and widowers entitled to spousal benefits are being underpaid, according to findings in a new audit undertaken by the Social Security Administration’s Office of the Inspector General (OIG).

The problem? The agency has failed to tell widowed spouses they can claim survivor benefits while still delaying their own benefits until age 70. Advisors with clients who have lost a spouse will want to take particular note.

“Based on our random sample of 50 beneficiaries, we estimate 11,123 would have been eligible for a higher monthly benefit amount had they delayed their retirement application for their own benefits until age 70. Of these, we estimate SSA underpaid about $131.8 million to 9,224 beneficiaries who are now age 70 and older,” the inspector general report found.

In addition, OIG estimated that SSA will underpay an additional 1,899 beneficiaries who were under age 70 approximately $9.8 million annually, beginning in the year they attain age 70, the audit found.

The agency has agreed with the findings, OIG said.

While it is up to eligible claimants to determine whether they want to take benefits before age 70, “SSA needs to improve controls to ensure it informs [widowed] beneficiaries of their option to delay their application for retirement benefits,” the audit found.

When widows and widowers apply for retirement benefits, it is automatically seen by the SSA as an application for both benefits. In almost all cases, SSA employees failed to inform claimants of their age-based options and the increasing benefits available for each year the claimants waited to apply.

Advisors usually agree that delaying an application for SSA benefits can greatly increase annual payouts for claimants as long as they don’t need the money and are counting on longevity.

According to the SSA:

At age 67, you'll get 108 percent of your monthly benefit because you delayed getting benefits for 12 months.

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