Every single day, I get emails from readers who seem to be absolutely obsessed with the idea of “maximizing” their Social Security benefits. And frequently, those emails are dripping with anxiety and sometimes almost torment. It’s like these folks are just worrying themselves sick that they might be missing out on a few bucks in potential Social Security benefits.
I think this maximizing mania stems in large part from all the financial planning come-ons that are out there. If you’re over the age of 55, I’d bet my bottom dollar that you’ve gotten more than a few flyers in the mail telling you that you are missing out on thousands of dollars in potential Social Security benefits because you don’t know all the secrets. Then you are invited to a seminar (that’s usually a sales pitch for other products and services) where you learn that the so-called big secret is simply to wait as long as possible to file for your Social Security benefits—because of a little bonus you get for delayed retirement.
On the one hand, I totally understand the desire to get as much as possible out of the Social Security system. I mean, who wouldn’t like more money, right? Well, maybe not everybody would. I’m reminded of a story I’ve shared with my readers before, but I think it’s time to do so once again. It goes back to the early days of my career working for the Social Security Administration. It was around that time that I met a guy who said that he was getting too much money!
The story dates back to 1973. I was working in a little Social Security branch office in a small farming community in central Illinois. Congress had recently passed the Supplemental Security Income program. As I’ve explained many times in this column, SSI is not a Social Security benefit and is not funded by Social Security taxes. It is a federal welfare program for low-income elderly and disabled people that just happens to be managed by the Social Security Administration.
So anyway, as SSI was being rolled out, SSA employees were sent on a mission to help as many people as possible apply for the benefits of the new program. But those “benefits” weren’t really all that impressive. At the time, the SSI program could supplement someone’s income up to $160 per month. In other words, if a person was getting a $120 monthly Social Security check and had no other income, he or she could get an additional $40 from the new SSI program.
(Gosh, it may seem to some of my younger readers that I am writing about the Great Depression era. I even find it hard to believe that in my lifetime, people were living on $160 per month, or even less!)
Well, speaking of even less, one of the folks I came across in our efforts to find people potentially eligible for SSI benefits was an old man living all alone in a two-room house on the outer fringes of our little town. I’ll call him Don. Don was about 70 years old. He was single and living on an $80 per month Social Security check. That was his only income in the world! His little house was paid for, and with the help of food stamps and some assistance from a local government agency with his utility bills, Don managed to get by on that small amount of monthly income.
When he came into the office to see me with a letter we had sent him about the new program, I explained that an SSI check would double his monthly income. Instead of receiving just $80 per month from Social Security, he would get an additional $80 per month from SSI. His monthly income would go up to a whopping $160! But surprisingly, Don was reluctant to sign up. He explained that he was getting by just fine without the extra help. But what convinced him to apply for SSI was the added bonus of automatic eligibility for Medicaid benefits. (Medicaid is the federal health insurance program for poor people, as opposed to Medicare, which is usually tied in with Social Security eligibility and is available to both rich and poor Americans.)
Don applied for the new program, and within a few weeks, his monthly SSI checks started to roll in. After he got his first check, I went to his home to visit him. He proudly showed me the used TV he bought with his first SSI check. He said he was sure glad I talked him into signing up for SSI benefits. The next check came in, and I learned that Don bought a toaster oven.
Fast forward about three months, and one day Don parked his bike next to the big picture windows that fronted our little Social Security branch office and walked in. I noticed his bike was festooned with a new basket and bell, and he even added some of those colorful “streamers” you see attached to the handlebar grips of kids’ bikes. (One of the ways Don got by on such a small income was by walking or riding his bike most places he went. He hadn’t owned a car in years.)
He came up to my desk looking a bit sheepish and said, “Tom, I want you to take me off this gosh darn SSI program.” When I asked why, he told me he just didn’t need all that money! I tried to point out that $160 per month really wasn’t all that much money.
But to Don, it was. He said, “Tom, look at my bike. I bought that bell and those silly streamers because I had the extra cash. I look like a fool riding around town now.” And then he went on: “And that stupid TV. I used to sit around at night and read. Now I’m glued to that darn contraption, and I waste my time watching ‘Love Boat’ and ‘Laugh-In!'”
I pointed out to Don that the extra money was one thing, but that the potential benefits of the Medicaid program could be invaluable to him. He thought about it for a minute and finally said, “I just don’t want it. I’ve gotten along just fine for years now on my Social Security checks and Medicare. I simply don’t need SSI and Medicaid.”
I had to do a bit of digging through our rulebooks because I had no idea how to take someone off the SSI program. But I found the instructions, located the right form needed to withdraw his application, and helped Don fill it out. He signed it and walked out the door a satisfied man. As he got on his bike, I saw him pull the streamers off the handlebar grips and stuff them into his pocket.
Later that evening, I stopped by Don’s place. I just wanted to make sure that he really wanted to stop his SSI checks before I submitted his withdrawal form. But as I walked onto the porch of his modest little house, I could see through a window that the TV was gone. Don was sitting in a chair reading. I didn’t even bother knocking on the door to ask him about his decision. I knew he was happy!
Now, I’m not recommending that my readers give up most of their earthly goods and live a simple life. But I am suggesting that there might be other things in life besides a maximized Social Security check that could make you happy.