Social Security and You: Social Security Rules (Not Reps) Confuse Readers
Anyone who has read my column for any length of time knows that I have occasionally been critical of some of my former colleagues at the Social Security Administration for misleading people with misinformation about Social Security programs and policies.
But I totally understand that, many times, people who tell me they have been misled by an SSA representative have, in fact, received good information from the agency. But they have not understood what they were told. Or they misinterpreted something that was explained to them, leaving them all befuddled and confused. And then they write to me to complain that SSA reps have led them astray -- when, in fact, they haven't. Today's questions provide examples of that.
Q: I have been so misled by SSA reps. I don't know where to turn. I will be 68 in August, and I wanted my Social Security checks to start then. So, I filed and said I want my checks to start in September (because I know the August check comes in September). I had previously calculated my benefit myself and figured I will get $2,385, and that includes the 16% bonus I was due for waiting until age 68 to file. So, imagine my shock when I got a letter from the SSA telling me my first check would come in October and that I would only get $2,170. I called SSA's 800 number immediately. The first person told me my benefit would be recalculated in 2021. What's that about? Then I called back because I forgot to ask about my checks starting in October, and a different guy told me that's what I asked for on my application. I did not do that! I got so mad I hung up. But then I called back and got a third person, and she told me I could have gotten back pay and suggested I change my application to start my benefits in January. I thought that sounded like a good idea until she told me I'd get a smaller check. I got so confused I just hung up again. Why can't the people at the SSA get their stories straight? Why are they lying to me?
A: No one is lying to you. You just didn't understand what they were trying to explain to you. And maybe if you would have stayed on the line instead of hanging up so quickly, they might have been able to help you comprehend what is going on. So, now I will take a shot at it.
Let's start with your benefit start date. The application form would have asked you when you want your benefits to start. You told me you wanted your checks to start when you turned 68 in August. But you did what so many people do with this issue. You overthought the question. Instead of simply indicating August as your start month, you reasoned that Social Security checks come one month behind, so you must have indicated on your application that you want your checks to start in September.
Well, by answering that way, the SSA's computer system thinks you want your benefit start date to be September. So that's why the "award letter" you got said your first check (the September check) would be sent to you in October.
The second issue that confused you is the amount of your benefits. I'm not sure how you came up with the $2,385 benefit rate you figured. But for now, let's just assume that was right. You said you added in "the 16% bonus." That's where the problem lies -- and here is why.
You actually get a "delayed retirement credit," or a DRC, of two-thirds of 1% for each month you delay benefits after age 66. That comes out to 8% per year, or 16% for the two years that you waited to start your benefits.
But here is the catch. You cannot get any DRCs for a year until the year is over with. So, the benefit rate you start out getting in September 2020 will include all DRCs you were due through the end of 2019. And you can't get any DRCs for 2020 until next year. That is what the SSA rep was trying to explain to you when he said your benefit will be recalculated in 2021. It will. That's when you will get all of the delayed retirement credits for 2020 added to your Social Security check.
Finally, let's get into that retroactive check business. Any Social Security claim filed after your full retirement age comes with the possibility of claiming up to six months' worth of retroactive benefits.