Public slow to embrace Social Security's online tools

A recent explosion of retiring boomers is putting new demands on the Social Security Administration, and the agency is having a hard time keeping up.

Think of it as yet another supply chain disruption during the Covid era. But instead of consumer goods being waylaid on container ships or factory orders backlogged due to computer chip shortages, this latest crisis is primarily the result of a personnel shortage.

“An explosion of retiring baby boomers are increasing demand for Social Security services at a time when budget constraints and retiring staff are limiting the agency’s ability to deliver those services,” a new report from the Center for Retirement Research at Boston College found.

The fact that Social Security offices remain closed to the public nearly two years after the Covid pandemic began in March 2020 isn’t helping matters.

“Despite SSA’s investment in tools with significant labor-saving potential, such as online benefit applications, the share of retirees applying for benefits online has hovered around 50% since 2013,” the CRR report said.

SSA launched its first online claims application for retirement benefits in 2000. Although the monthly online application rate initially grew significantly after this option was introduced, it has slowed considerably in the last decade.

To investigate recent and future trends in online claiming, the CRR surveyed 2,600 people ages 57 to 70 about how they claimed, or intend to claim, their retirement benefits and their communications with SSA during the process. Although 60% of survey respondents applied or intend to apply online, only 43% of respondents claim completely online — that is, without contacting SSA in person or by phone.

I get it. I’m one of the minority of people who started and completed my benefit application online and was successful. But when my husband attempted to file a restricted claim for spousal benefits on my earnings record, we hit a glitch, and ended up calling Social Security to track down the status of his application. Clearly, we weren't alone.

The CRR report found the reasons respondents cited for contacting SSA representatives can be divided into four categories:
• complex issues that clearly require talking to an SSA representative, such as discussing the specifics of spousal and survivor benefits;
• general aversions to online services, like a concern about data privacy;
• straightforward inquiries that could be addressed without contacting a representative, like checking the benefit amounts and eligibility;
• and obstacles to online claiming that could be remedied by SSA service improvements, such as fixing data errors.

The CRR report concluded that younger workers' greater familiarity with online tools will produce incremental increases in the share of retirees who claim completely online in the future, growing by about 10% over the next decade.

But more significant changes could come from implementing policies that help more retirees find answers to their basic inquiries online, such checking benefit eligibility and following up on a submitted application, the report said. If such needs were handled through online services, rather than an SSA representative, the share of respondents who claim completely online would increase by about 15 percentage points.

“But even with changes in online comfort and new policies, a significant share of retirees will continue to contact SSA in-person or by the phone when claiming benefits,” the report concluded.

Although I applaud SSA’s efforts to automate some of the application process, there's still a need for human interaction when it comes to deciding when and how to claim benefits. Perhaps SSA isn’t the best place to go for those answers, and financial advisers could help fill the void.

With 10,000 people turning 65 every day combined with the workplace disruptions caused by the Covid-19 pandemic, a record number of boomers have retired over the past two years. One of the first questions most clients ask when considering retirement is, “What should I do about Social Security?”  Jeff Quigley, vice president at LifeYield, a fintech company that helps advisers maximize retirement income for clients, told me in a recent interview.

“With more than 2,700 rules, Social Security is a minefield unless advisers turn to technology to customize answers to that question for every family,” Quigley said.

“Advisers can demonstrate the benefits of a custom strategy for Social Security and then proceed to in-depth conversation on strategies for accumulation and retirement income,” he explained, adding that one of his colleagues jokingly refers to Social Security claiming discussions as the “gateway drug to financial planning.”

Clearly there's a continued need for Social Security claiming advice. Those financial advisers who can help answer clients’ questions about Social Security benefits will be well-situated to respond to the current retirement surge.

[More: Social Security benefits checklist]

[Questions about Social Security rules? Find the answers in Mary Beth Franklin’s ebook at Maximizing Social Security Retirement Benefits]