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Are You Leaving Social Security Benefits on the Table?

A recent audit completed by the Social Security office of The Inspector General found that an estimated 15,076 retirement beneficiaries were entitled to an additional $193.8 million in widow(er)’s benefits. Over their forecasted lifetimes, they would lose out on another $530 million in widow(er)’s benefits if corrections were not made. There are systems in place at the SSA to identify the many individuals who become widowed after starting their retirement; however, with 2,700 rules governing social security, this is an area that falls through the cracks. In fact, based on the sample reviewed, 69% of the retirement beneficiaries were owed higher benefits. 

A separate audit completed in February 2018 found that SSA workers were not telling surviving spouses, who were also eligible for retirement benefits, that they could get more by starting with the survivor benefit and switching to their own higher retirement benefit at age 70. Here, SSA workers did see that widow(er)s were entitled to both, but rather than helping them maximize benefits by delaying their personal retirement benefit to age 70, they took an application for both benefits, thus stopping the accumulation of delayed credits. This audit identified 11,123 beneficiaries who were underpaid by about $140 million, or 82% of the sampled beneficiaries.

We have long respected Social Security’s large automatic systems. Any agency that can issue a trillion dollars in benefits each year to some 63 million people deserves our appreciation. I also welcome their reporting of the audit findings as it confirms what we have regularly experienced in the past: When it comes to helping individuals maximize benefits — especially when they are entitled to more than one — SSA can fall short. They are always good at processing the millions of claims monthly, but optimizing an individual’s benefits is not in their wheelhouse. To learn more about our retirement services visit this page.

A recent widow I worked with had this experience. At age 66, she has reached her full retirement age (FRA), but is still working. Her recently deceased husband had been receiving Social Security benefits, and she was originally told she could not continue his benefit while she was still working. However, she could receive her personal benefit. The full truth is that she could utilize either her retirement or survivorship benefit, and still continue to work without experiencing a reduction in benefits. 

Additionally, for her to optimize all of the benefits owed to her, she was better off delaying her personal benefit and permanently growing it by 8% a year, while at the same time receiving her husband’s full survivorship benefit. (The survivorship benefit does not grow beyond the recipients FRA; therefore, she had no opportunity to improve it by delaying it beyond FRA.) In her situation she chose to delay her personal benefit, $2,460 a month, and to start receiving her monthly survivorship benefit of $2,000 for the next four years. At age 70, she will be able to switch to her personal benefit, which will have increased to $3,608 a month. By simply delaying her personal benefit and utilizing the survivorship benefit until age 70, she improved her annual benefit by more than $12,000 a year. This will add up to an additional $250k+ over her lifespan!

The takeaway is that the Social Security Administration does a great job processing claims once you are in the system. However, we should not count on them to help you find the highest benefit, or to provide guidance on whether it makes sense to switch to a different one over time. In this very low interest rate and challenging investment environment, claiming the correct Social Security benefit for your situation can make a huge difference in the quality of your retirement lifestyle.

We always help our clients through the claiming process. If you have questions about your current benefit, or if you have not started it yet and want to understand the best strategy for you, give us a call at (509) 735-7507 or schedule an appointment with an HFG Trust advisor here. We are also happy to work with your loved ones and friends to provide assistance with this important decision as well.

To learn more about our firm’s retirement planning visit our Portfolio Management page.

Bob Lagonegro, CFP®



This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.