Social Security Benefits Rounded Down

Tom Margenau discusses some Social Security history. (Karin Hildebrand Lau/Shutterstock)

Q: I’ve heard that Social Security is cheating me and millions of other Americans out of Social Security benefits they are due because they round down to the nearest dollar when they are supposed to be rounding up. Is this true?

A: Well, it’s true ... and it’s false. It’s true when you say that benefits are rounded down, but it’s false when you say that they are supposed to be rounded up. Here’s the story.

When Social Security first started in the 1930s, monthly benefit checks were paid in the exact amount, including dollars and cents. And the law specified that the final check should be rounded up to the nearest penny.

Then in 1950, Congress changed the rules a bit. Recognizing that there are many steps in the process used to compute a monthly Social Security check, they said that the benefit should be rounded up to the nearest dime at each step in the process.

But then we got to the 1980s, and the political mood in the country—and Congress—had shifted to a more conservative tone. Congress was looking for ways to trim government expenditures, not expand them. And Social Security, being one of the largest government programs of all, came under the knife. That’s why the 1983 amendments to Social Security included some relatively significant cuts, like eliminating what were known as “student” benefits and cutting off monthly payments to widowed mothers when their youngest child turned 16 (as opposed to 18 under previous law).

But one little-noticed change brought about by the 1983 amendments was a rule that required benefits to be rounded down, not up. At each step in the computation process, benefits were now required to be rounded down to the nearest dime. And a new twist was added. The final benefit check would no longer be issued in the exact amount. Instead, the new law said the final benefit would be rounded down to the nearest dollar.

Q: This may not be the most important question you’ve ever answered, but I am curious about something. I notice that most of my Social Security correspondence comes from Baltimore, Maryland. I checked and learned the Social Security Administration headquarters is there. Why is it in Baltimore, not Washington, D.C., where most other federal agencies are located?

A: Well, there is a bit of an interesting story about that. The Social Security Board (the predecessor to the Social Security Administration) was established in 1936 along with a slew of other federal agencies that grew out of Franklin Delano Roosevelt’s New Deal program. And all those agencies were scrambling to find office space in Washington, D.C. I don’t know if the Social Security Board was a latecomer to this office search process or what. But they couldn’t find suitable digs in Washington.

So they looked up the road in Baltimore. (For those of you who were not paying attention in geography class, Baltimore is about an hour’s drive northeast of the District of Columbia.) They found a big old warehouse in downtown Baltimore that they decided to use as a temporary headquarters until something suitable could be found in our nation’s capitol.

However, as time went on, the agency’s leaders must have decided that it would be too much hassle to move all their office equipment, files, and staff 50 miles down the road to Washington. So they simply decided to stay put in Baltimore.

But as the agency grew, they quickly learned that the old warehouse was just too small and cramped to hold everything you need to run a nationwide social insurance program. So they eventually relocated to a far-western Baltimore suburb known as Woodlawn. And that’s where the SSA’s headquarters remains today.

I’m sure when the agency first moved to Woodlawn, it was an outlying area filled with more cows than people. But today, it’s a bustling part of the Baltimore metro area. One thing I found interesting when I worked there (this would have been back in the 1980s and 1990s) is the importance of the large government agency, with about 12,000 employees, to the local area and economy.

I was particularly struck by how the name of the agency intermingles with local businesses. For example, the main street through Woodlawn is known as Security Boulevard. (The SSA’s headquarters address is 6401 Security Boulevard.) And many businesses in the area adopted “Security” in their names. For example, there was Security Ford, Security Drug Store, Security Liquors, and even Security Square Mall.

With the space I have left, let me share a little anecdote about the SSA’s main headquarters building. Even though the building was designed to house all the administrative people needed to manage an institution that plays a role in the life of almost every American, some local people still thought of the place as just another local Social Security office—albeit a very big one!

So folks would show up to file for their retirement benefits or to report a change of address or any of the many other tasks that were part of the Social Security process. But of course, that local administrative center just was not designed to take care of that kind of business. (After all, you would not go to Walmart’s headquarters to buy some underwear or a quart of milk as you would at your local Walmart store.)

So these folks who went to SSA’s headquarters to conduct routine Social Security business were steered to the closest local Social Security office—that happened to be five miles away in Randallstown, Maryland. That caused lots of folks to complain about being shuffled around. So SSA officials eventually decided to open a tiny one-room Social Security office on the ground floor of 6401 Security Boulevard that was staffed by a representative from the Randallstown field office.

I used to get a chuckle out of this. Occasionally, someone with a grudge would come to the SSA headquarters office from across the country, march into the building, and announce something like this: “I demand to speak to the head of the agency about a problem I am having with my Social Security.” That person would be sent down the hall to the little Social Security office. Usually, the problem would get resolved and the irate customer would leave thinking he outfoxed the system by going straight to the top when he actually just talked to a local Social Security office rep—the same thing he could have done back home at his local office.