Anyone who has read my column for any length of time knows that I have occasionally been critical of some of my former colleagues at the Social Security Administration for misleading people with misinformation about Social Security programs and policies.
But I totally understand that, many times, people who tell me they have been misled by an SSA representative have, in fact, received good information from the agency. But they have not understood what they were told. Or they misinterpreted something that was explained to them, leaving them all befuddled and confused. And then they write to me to complain that SSA reps have led them astray—when, in fact, they haven’t. Today’s questions provide examples of that.
Let’s start with your benefit start date. The application form would have asked you when you want your benefits to start. You told me you wanted your checks to start when you turned 68 in August. But you did what so many people do with this issue. You overthought the question. Instead of simply indicating August as your start month, you reasoned that Social Security checks come one month behind, so you must have indicated on your application that you want your checks to start in September.
Well, by answering that way, the SSA’s computer system thinks you want your benefit start date to be September. So that’s why the “award letter” you got said your first check (the September check) would be sent to you in October.
The second issue that confused you is the amount of your benefits. I’m not sure how you came up with the $2,385 benefit rate you figured. But for now, let’s just assume that was right. You said you added in “the 16 percent bonus.” That’s where the problem lies—and here is why.
You actually get a “delayed retirement credit,” or a DRC, of two-thirds of 1 percent for each month you delay benefits after age 66. That comes out to 8 percent per year, or 16 percent for the two years that you waited to start your benefits.
But here is the catch. You can’t get any DRCs for a year until the year is over. So, the benefit rate you start out getting in September 2020 will include all DRCs you were due through the end of 2019. And you can’t get any DRCs for 2020 until next year. That’s what the SSA rep was trying to explain to you when he said your benefit will be recalculated in 2021. It will. That’s when you will get all of the delayed retirement credits for 2020 added to your Social Security check.
Finally, let’s get into that retroactive check business. Any Social Security claim filed after your full retirement age comes with the possibility of claiming up to six months’ worth of retroactive benefits.
I’m guessing you filed your Social Security claim in June. At that time, you could have said you wanted the 6 months’ worth of retroactive benefits. In other words, that means January 2020 would have been your starting date. Had you done that, you would have received the big back-pay check. But your ongoing benefit rate would be smaller. Why? Because you wouldn’t be eligible for any delayed retirement credits after January. That means your ongoing benefit rate would be about 5 percent less.
If you want, you could call the SSA and tell them you want to change your start date to January. But then be prepared for a little less money each month in the future.
In the 1980s, the Reagan administration and Congress were looking for some ways to save a few nickels in Social Security outlays. And one of the little gimmicks they came up with was a law that says you must be 62 for an entire month before you can get your first Social Security check.
You turned 62 near the end of June, so that means July is the first month that you are age 62 for the whole month. So, the July check is the first one you are due. And based on your day of birth, the July check will be sent to you on the fourth Wednesday in August.
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