Here's my question for today. Should you file for your Social Security benefits a) online, b) over the phone, or c) physically in the local office?
My answer is to file online when possible. You can file online for retirement benefits as well as for spousal and divorced spousal benefits. You cannot, unfortunately, file online for widow(er)'s or divorced widow(er)'s benefits, child or child-survivor benefits, parent benefits, child-in-care spousal benefits, or mother (father) benefits.
Social Security's online retirement benefit application process is a safe way to file for your retirement benefit because it asks you this very important question. When do you want your retirement benefit to begin?
You can also enter comments at the end specifying when you want your benefit to begin.
The physical application used in the Social Security office and, I presume, by Social Security staff taking applications over the phone does not ask this simple question. Consequently, the staff are free to give you retroactive benefits you don't want and, thereby, permanently reduce your retirement benefit. This happened to my dentist as I wrote in a prior column. My dentist, whose first name is Alex, was trying to collect his retirement benefit starting at age 70. Alex went into the local office three months before reaching 70, told the staff he wanted to start his benefit at 70. But instead of doing what he asked, they set his retirement benefit initial collection date back six months from the date he appeared in the office. This was nine months before Alex's 70th birth. As a result, Alex ended up with a retirement benefit that is 6 percent lower for the rest of his life than it should have been. Alex did receive six months of retroactive benefits, but he had no idea that this was coming at the cost of a permanently reduced monthly benefit.
Another friend of mine, Paul Joskow, who heads up the Sloan Foundation, told me the same thing happened to him. Paul went to his local office, asked for his age-70 benefit and a check for retroactive benefits showed up. Paul realized he wasn't getting what he asked for and went back to the office and returned the check. Then he had to go in a third time to finish straightening everything out.
Had Alex and Paul filed online that could have specified that they wanted to begin their benefit in the month they turned 70 and, presumably, all would have gone well.
So let me pause to ask Social Security Commissioner, Carolyn Colvin, why the physical application form doesn't let anyone specify the date the retirement benefit is to begin in the case of someone filing for retirement benefits after full retirement age?
Commissioner Colvin, you have been running Social Security for three years. Before that you worked at Social Security as Deputy Commissioner. Is it possible for you to fix your application form? If not, why not? Is there some law that requires Social Security to use an application form that's designed to make major mistakes? If there is no such law, could you please do the public a favor and use your MBA training and years of experience at Social Security to personally sit down at a computer and edit your application form? If not, why not? If you need help with this, I'm happy to come down to Baltimore and assist. I think it will take me less than 10 seconds.
While I'm at it, let me ask you, Commissioner Colvin, a few more questions.
Why hasn't Social Security searched to determine the possibly tens of thousands of widows who were inappropriately filed for their retirement benefit at the time they filed for their widows benefit? As Social Security whistle blower, John McAdams, and I have explained in a July column and again in a November column, this incompetence/malfeasance on Social Security's part can cost such widows thousands of dollars per year. You have the technology to find such widows, let them know that Social Security has ripped them off, and compensate them for their lost benefits. Why aren't you doing so?
By the way, Commissioner, the source of this problem may lie in the widow's benefit application form, which states at the top:
I apply for all insurance benefits for which I am eligible under Title II (Federal Old-Age, Survivors, and Disability Insurance) and Part A of Title XVIII (Health Insurance for the Aged and Disabled) of the Social Security Act, as presently amended.
But the form should say no such thing. You know as well as I, Commissioner, that widow(er)s can file for their widow(er)'s benefit before taking their retirement benefit. And the widow(er)s I'm referencing are those who should take just their widows benefit as early as possible and wait till 70 to take their higher retirement benefit. But a form that begins with the above italicized sentence tells both your staff and those filing for their widow(er) benefit that waiting to collect much higher retirement benefits at 70 is not possible, when it is!
Fixing this problem with your application forms should take less than 3 seconds. Let me explain how. You select this text and you hit the delete button. Again, I'm happy to come down to Baltimore and do this for you if you'd like.
Also, Commissioner, how do you respond to the Social Security horror stories I've been writing about, such as the seven staffers who, over the phone or in person, told a lady in Tacoma, Washington that she couldn't suspend her retirement benefit when you and I know that's perfectly legal? Is it that hard to train your staff? I'm happy to hold a webinar for them.
Finally, Commissioner Colvin, why does your website continue to focus attention on life expectancy and suggest that when someone takes their benefits doesn't matter? As I wrote you in this column (http://www.pbs.org/newshour/making-sense/column-ignore-this-piece-of-advice-from-social-security-to-get-maximum-coverage/), you are running an insurance company and breaking even is not what why people use insurance companies. They use insurance companies to mitigate risk. The risk Social Security is reducing is longevity risk and the worst case outcome is that someone lives not to their life expectancy, but to their maximum age of life. So your focus needs to be on maximum age of life not expected age of life. None of us can count on dying on time.
In closing, Commissioner Colvin, let me invite you to respond publicly to my questions. The public needs to hear how you are fixing a system that is increasingly marked by incompetence, why the simplest problems, like the nature of your application forms, which can be fixed instantly, have yet to be fixed, and why Social Security staff are being so poorly trained.
