When it comes to deciding when to collect Social Security benefits, one of the biggest mistakes a client or financial adviser can make is assuming that the Social Security Administration representatives will help them sort through their claiming options.
“The agency is having some real issues about losing staff and not replacing them,” said James Blair, a 35-year veteran of the SSA and co-founder of the National Social Security Association, a private firm that educates financial advisers about Social Security claiming rules.
“What you have left are folks who are fairly new” who may not be as familiar with the various nuances of optimizing retirement benefits, Mr. Blair said.
SSA has lost 11,000 employees — 12% of its workforce — since 2011, Acting Social Security Commissioner Carolyn Colvin said in a statement following the release of President Barack Obama's fiscal year 2015 budget proposal earlier this month.
“While it is our goal to balance service, quality and stewardship, limited resources over the past three years have hindered our ability to do so,” Ms. Colvin acknowledged.
The acting commissioner explained that for the first time in three years, the agency's current funding level allows it to replace employees who quit or retire this year, as well as some, but not all, of the prior year losses.
“These new hires will allow us to begin reversing the deterioration in service that has occurred over the last three years,” Ms. Colvin said. “Sustained, adequate, and timely funding is essential for us to fully recover and improve service.”
In the meantime, what's an adviser to do?
“The SSA is pushing everyone to file online,” said Mr. Blair. “If you know what you're doing, filing online is fine,” he conceded.
Social Security spokeswoman Kia Anderson confirmed that when filing online, you can restrict the scope of your application to spousal benefits as long as you are at least full retirement age by answering “yes” to the question of whether you want to delay receipt of your retirement benefits on the “when to start retirement benefits” page.
Or as long as you are at least full retirement age, you can specify that you want to “file and suspend” your benefits in the remarks section of the online application.
But if you rely on the SSA for guidance, in most cases the representatives will encourage applicants to file for benefits at the earliest possible time, even if waiting to claim a larger benefit later may make more sense in the long run, Mr. Blair said.
Don't hold your breath for any fast improvement in customer service.
“With projected increases to SSA's workload from retirement and disability filing from the nation's baby boom generation, and a continued wave of retirement of experienced staff, the need for a plan to detail how it will address future service delivery challenges is greater than ever,” the Government Accountability Office said in an April 2010 report.
Three years later, in May 2013, the GAO acknowledged that although SSA has made strides in modernizing its information technology systems, the agency “faces an ongoing retirement wave which will make it difficult to respond to growing workload demands.”
The GAO noted that the increase in the SSA's projected workload as a result of retirement and disability filing is expected to be 14% during this decade at the same time that 41% of its current workforce will be eligible to retire.
It sounds like a real opportunity for financial advisers to become the go-to source for Social Security claiming decisions. I plan to attend one of the NSSA's online training programs this weekend.
When I return, I'll report my impressions of the NSSA's Social Security training program and tell you whether I think it is worth advisers' time and money.