Social Security Can't Even Get Its FAQs Right

Source: Forbes

Article By: Laurence Kotlikoff

When Congress changed Social Security spousal benefit provisions in November 2015, it grandfathered anyone 62 or over 62 as of January 1, 2016. The grandfathering permitted anyone meeting this birth deadline to file just for a spousal benefit starting at full retirement age, while waiting till 70 to collect their own retirement benefit, when it would start at its largest possible value.

The catch for a married spouse in this boat is that their partner must be collecting a retirement benefit or have filed for a retirement benefit and suspended its collection prior to April 30, 2016. The catch for a divorced spouse in this boat is that they a) had to have been married to their ex for 10 or more years, b) their ex has to be 62 or older for them to collect a divorced spousal benefit, and c) they have to have been divorced for at least two years or their ex has to have filed for their retirement benefit.

There are millions of Baby Boomers who are in this boat and also meet the requirements (catches) to receive just a spousal benefit starting at 66, the current full retirement age.

But if you are eligible and want to do this, you face yet another hurdle ––– Social Security's inept staff who have been misled by their even more inept top brass into thinking that no one is grandfathered to do this. Want proof. Take a look at Social Security's FAQ on spousal benefits posted here. There is nothing whatsoever stated about the grandfathering provision in the new law. Instead, one finds this statement:

"If you are eligible for both your own retirement benefits and for benefits as a spouse, we always pay your own benefits first. If your benefits as a spouse are higher than your own retirement benefits, you will get a combination of benefits equaling the higher spouse benefit."

This statement is simply false in the case of those who are grandfathered. As indicated, such spouses can be eligible for both their own retirement benefit and a spousal benefit and if they take just their spousal benefit, Social Security will not, as this statement claims, pay their own (retirement) benefits first and provide them simply an excess spousal or an excess divorced spousal benefit, which could be zero or very small.

Later in the FAQ we find this statement:

"If you have reached full retirement age and you are eligible for a spouse’s benefit and your own retirement benefit, you may have options to increase your own retirement benefit amount."

This statement, if it is meant to pertain to those in the grandfathered boat, is misleading. Both those in the grandfathering boat who meet the catches and those not in the boat always have the option at full retirement age of waiting till 70 to collect a larger benefit or suspending their retirement benefit and restarting it at 70 in the case they have already started collecting their retirement benefit. Those in the grandfathered boat who meet the above-listed catches can collect just a spousal or divorced spousal benefit while their own retirement benefit grows. Those not grandfathered can delay or suspend their retirement benefit collection, but they can't collect a spousal or divorced spousal benefit while their own retirement benefit is in suspension. Furthermore, if they are hoping to wait till 70 to take their retirement benefit, but file for a spousal or divorced spousal benefit, they will, under the new law, be deemed to also be filing for their retirement benefit. In this case their spousal or divorced spousal benefit will become an excess spousal or an excess divorced spousal benefit.

There is nothing else in the FAQ that remotely pertains to the grandfathering provision. Nor does the term "grandfathered" or the key date of January 1, 2016 show up in the FAQ.

Now to be fair to Social Security, there is another screen referenced by "deemed filing" with FAQs that correctly clarify the grandfathering and reference January 1, 2016. The problem, though, is that the public does not know what the term "deemed filing" means. So they have no reason to do more than Google spousal benefit, go to Social Security's spousal benefit screen with another link to "If you are eligible for your a spouse's benefit and your own retirement benefit." and click on that link. This brings you to the false and misleading FAQ screen.

Things would not be so bad if Social Security's staff were properly trained and could help people appropriately. But that's far from the case. The staff are abysmally trained and often extremely arrogant and rude in claiming they are absolutely correct when they are 100 percent wrong.

One of my company's clients just encountered this. He's in the grandfathered boat and just turned 66. His wife is collecting a retirement benefit, so he can file just for a spousal benefit. Our software told him to file just for a spousal benefit. Yesterday he called Social Security and was told he can't file just for a spousal benefit. "But I'm grandfathered to do this," he told the staffer. "No you're not. Read this FAQ." The FAQ the staffer told him about is the false and misleading one I just told you about. When our client insisted the FAQ was wrong the staffer insisted she was right and he was wrong and advised him to file for a spousal benefit and he'd see for himself that he'd be forced to take his retirement benefit. Apparently this staffer had never read the deemed filing FAQ.

I personally called a local Social Security office about a year back to sort out a similar case. I politely explained I was calling on behalf of my client and that I was very familiar about Social Security filing provisions. I was then treated to a half hour tirade in which the ratio of my words to the staffer's words was close to zero. After the 30 minutes was almost up, the staffer told me she was going to hang up as she was an expert on these matters and I was simply wrong.

I said fine, but could I have your name so I can include you in the column I'm writing tomorrow in Forbes about our exchange and how you and other incorrectly informed Social Security staff are routinely costing tens to hundreds of thousands of people tens of thousands of dollars. At this point, she abruptly hung up. But ten minutes later she called me back and apologized. Apparently, the threat of being named in a nationwide publication (I would not have mentioned her name, but I would have mentioned her local office.) led her to double check the rules. All ended well for the client. But I learned first hand how people are being treated by Social Security.

The moral to the story is do not ask Social Security anything and do not read anything on their website and, for that matter, do not use their online tools, which are totally screwed up and cannot even provide correct benefit estimates. Instead, figure out from my or some other reliable company's software precisely what to tell Social Security to do. And if they refuse, go to a different office, ask to speak to a supervisor, call back and speak to someone else on the phone, but don't take no for an answer. As a group, Social Security staff is not to be trusted, so you literally need to shop around to find someone who actually knows the rules, in which case they will do what you tell them to do.