Every day, Social Security sends recovery bills, many of them massive, to beneficiaries who were mistakenly overpaid for years/decades. Social Security’s mistake is their mistake. Do not take a penny before checking that what they are going to send you is correct. Larry Kotlikoff is a professor of economics at Boston University and founder and president of Economic Security Planning, Inc.
I routinely receive emails from people who, out of the blue, received a letter from Social Security demanding, with no clear explanation, that they pay previously paid benefits within 30 days! Very young children, elderly widows, retirees, spouses, divorcees, disabled workers, you name it. Invoices can be in the thousands, tens of thousands, and even hundreds of thousands. A disabled woman was claimed for over $300,000 for a mistake Social Security admitted in writing to be hers! For that lady, who lived solely on Social Security, and for many others, these letters could be a death sentence or, at least, a misery sentence. How is that? Well, if she doesn’t pay, which most people can’t, Social Security will almost always stop sending her a penny until she has paid “what she owes.” This can take years or decades.
In virtually all cases, claims for reimbursement stem from Social Security miscalculating the correct amount of a beneficiary’s benefit years or even decades ago. But Social Security’s mistakes are their mistakes. If you are extremely poor, they may decide to let you keep your overpayments. Otherwise, bad luck. The disabled woman who “owed” some $300,000K was found by the Social Security Administrative Law Judge to be too affluent to qualify for system error relief. Because? Because the judge, I kid you not (I read her decree verbatim from her), decided that she had too many channels on her cable plan and therefore she must be fine.
Social Security is, simply put, a financial terrorist organization. His routine abuse of countless (we don’t know how many) Americans, something I’ve been writing about for decades, has finally started getting mainstream media attention. Look at this column what is discussed the washington post recent coverage. But nothing less than an act of our dysfunctional Congress will remove the financial sword of Damocles that hangs over the heads of America’s 70 billion Social Security recipients. That’s one in six of us!
This is today’s reality:
The 70 million Americans currently receiving Social Security benefits are at risk of having some, most, or all benefits received in the past restored to them!
Let me describe what happened to Fredda McDonald, whose son went to elementary school with one of my sons. Fredda and her husband, Don, live in Lexington, Massachusetts. You won’t find nicer people. They contacted me three weeks ago about her case.
In 2018, Don applied for his full retirement benefit at full retirement age and immediately stopped it. He did it in 2018 by phone. The advantage of simultaneously filing and suspending the retirement benefit was removed in 2015. However, doing so was and continues to be permitted. However, it does not provide any advantages of any kind. Any half-trained Social Security staffer should have known about the history of filing and suspending and that the 2015 change in law removed their advantage for anyone who files and suspends after April 2016.
The staff member should have asked Don, “Why are you doing this?” Don would have said, “Allow my wife to claim only her spousal benefits when she reaches full retirement age in a year and a half. She was born before January 1, 1954, so she is grandfathered in to do this.” “.
To this the employee should have responded. “You have the correct key date of birth 1-1-54. But you are not aware of another provision of the law passed three years ago. During periods when your benefit is suspended, no one, including your wife, can collect benefits outside of your work record.
The clerk did not say those words. Instead, he filed and suspended Don the same day. Fast forward 1.5 years and Freeda and Don are on their way to the Social Security office in Cambridge, Massachusetts. There they explained that Don had filed and suspended and that Freeda wanted to collect only the spousal benefit from him because he was born before 1-1-54. “Fine, they said. Fredda, we’ll sign you up for your spousal benefit only.”
This was the even bigger mistake. The Cambridge employees should have a) asked why Don had done something absolutely worthless and b) informed them both that Fredda could not collect from Don’s work record while Don’s benefit was suspended. So here we have Social Security screwing up not once, but twice. Because? Because the system is complex and the staff is overworked and under-trained. Or, they know what they are doing and are acting maliciously.
There’s real economic damage here, even for people like Fredda and Don who don’t survive on Social Security. If you tell people for X years that their income is $Y more, they are going to spend the extra income thinking it will continue for the rest of their days. When you get it back, they will have to reduce their expenses by a greater annual amount than they had increased because they now have fewer years to absorb the blow.
I wish Fredda and Don had used one of my company’s software tools: MaxiFi Planner either Maximize my Social Security. If they had, they would never let Social Security fool them through incompetence or malice. In fact, I hope that everyone who is about to make any move of any kind regarding Social Security will use our software early. Our software is the only tool I know of that makes these complex calculations correct. There may be other similar tools. The free ones are so primitive they’re a joke. As for our competitors’ tools, their license agreement prohibits us from determining their accuracy.
Promoting our software may seem selfish. So let me reveal a few that I haven’t done publicly in the past. My software company is now 30 years old. I have yet to make a penny from the company because I’d rather keep prices low and help people. This is true effective altruism, not the BS effective altruism that FTX’s Sam Bankman-Fried was selling. So please don’t buy our cheap software to help me. Use it to help, in fact, to protect yourself.
If you are currently receiving, you can also use our software, in most cases (not if you are disabled or for some of those subject to WEP or GPO provisions) to verify that you are receiving the correct benefit amount. None of us wants to receive a bill in the mail, big or small, from a system that routinely makes mistakes. In addition, it is a system without internal software checks. The Social Security software should have known, as our software knows, that Fredda couldn’t collect a spousal benefit when her husband’s retirement benefit was suspended. The fact that the System software is letting this error pass means that some, many, or most of the 70 million beneficiaries may be charging the wrong amount. This means:
All 70 million Social Security benefits must verify with accurate software that they are receiving the correct amount – not too little and not too much!
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