Glitch Causes Social Security to Be Way Off on Some Estimates. Are You Safe?

The Social Security Administration isn’t perfect, and a recent mix-up shows exactly why it’s so important to check your benefits to make sure you are getting everything you are owed.

In early August, the SSA finally acknowledged a glitch that affected some individuals who sent in the paper “On Request” form SSA-7004 since 2017, according to USA Today.

“Of the tens of thousands of paper requests the agency receives annually, less than 1% of those statements issued contained errors,” Mark Hinkle, acting press officer of the SSA, said in an email.

Less than 1% isn’t a massive amount, but it still shows the importance of checking your benefit statements and keeping good records on file to catch any potential mistakes.

The SSA provided a breakdown of the people affected by the glitch as anyone:

• Born in 1955, 1956 or 1957.
• 62 or older at the time of their request.
• Indicated on the paper form SSA-7004 that they planned to stop working at age 66.

Here’s a further breakdown of the glitch, how it was found and what the SSA is doing to address the issue, per USA Today:

How the Errors Came to Be Known

I first reached out to Social Security on July 5 to ask about reports that some statements did contain errors. My questions were triggered after I spoke with a well-known Social Security expert who had heard of an isolated problem. I didn’t get an answer from Social Security until early August.

Laurence Kotlikoff, professor of economics  at Boston University, wrote in a June 25 column in Forbes: “I’ve learned that Social Security is providing benefit statements that are flat out incorrect.”

Kotlikoff had heard one story from a Connecticut financial planner who was looking at a truly bizarre statement from a client. Some even wondered if that statement might be fake because it was just so amazingly off the mark.

The figure for claiming at age 62, for example, was nearly as good as the dollar amount you’d get for waiting to claim at full retirement age – which was age 66 and four months in this person’s case. It doesn’t work that way.

The Social Security retirement benefit system has tons of moving parts. But in general, you’re getting significantly more each month when you claim Social Security benefits at your full retirement age – or even more at age 70 – than if you would claim Social Security benefits at age 62.

Kotlikoff discovered a problem when a financial planner shared a story of a client who would only see a gain of $24 a month by waiting four years until the full retirement age of age 66 and four months, compared to taking a payment at age 62.

With those kind of numbers – which are clearly wrong – why bother waiting beyond age 62 to a few months past 66?

In his Forbes piece, Kotlikoff said: “The statement lists estimated retirement benefits at the client’s full retirement age (FRA) of 66 and four months at $1,061.”

That figure, he said, was on the money.

But he said the client’s retirement benefit at age 62 could not be 97.7% of the amount offered at the full retirement age, he said.

On top of that, the estimate listed the payout for age 66 at $1,372 a month.

“There’s no way that the age-66 benefit should be 29.3% larger than the benefit would be if taken four months later at the client’s full retirement age,” he said.

“Social Security has pulled lots of whoppers over the years,” said Kotlikoff, a longtime critic.

“But this one is truly beyond belief. It clearly entails someone either internal or operating remotely introducing massive mistakes to the system’s software code – code that has been working for years. The worst-case scenario is that this is the work of some foreign adversary,” Kotlikoff charged in his Forbes column.

Was this a one-time problem? A broad issue that impacted all statements? We simply didn’t know. I reached out to some financial planners in metro Detroit, as well as the AARP and others who had not heard of widespread mistakes.

Thousands Were Off

Thousands of statements were off.

“We were alerted that there might be a problem with some of the information on some statements,” Social Security said in its email.

“The agency looked into this issue and found that statements obtained through the ‘my Social Security’ portal, and those automatically mailed to workers age 60 and older, were not impacted. We did find that a very small portion of On Request paper statements contained inaccuracies,” the email said.

“We take our responsibility to provide the public with accurate information very seriously and regret any inaccurate statement, and we have fixed the program code for “On Request” paper statements.  We completed this fix in July.”

Consumers who received wrong estimates will be sent corrected information. Social Security said it had temporarily stopped issuing statements requested via Form 7004 as of late June. But the agency will resume sending On Request statements by mail now that the system has been fixed.

Reviewing Online May Save You Hassles

Social Security prefers that people create a my Social Security account at www.ssa.gov/myaccount to view and print a personalized statement.

You want to set up one of those accounts even long before you plan to retire, said Joel Eskovitz, senior policy adviser for the AARP Public Policy Institute.

The online account allows you to receive personalized estimates of future benefits based on your real earnings, see your latest statement, and review your earnings history.

Eskovitz said you want to make sure that you check your earnings history regularly while you’re working so that you can correct any mistakes early in the process.

The last thing you want to do when you’re trying to claim Social Security benefits is go back 20 years to try to fix a mistake in your earnings report, he said.