You can avoid the problems many people have when they apply for Social Security retirement benefits. Knowing the right actions to take can ensure you receive the benefits you intend instead of falling into the traps that snare many Social Security applicants.
There are two problems that commonly occur when people file to claim their retirement benefits. In general, Social Security changes their applications to either the default choices the agency establishes or a choice of benefits the agency believes is better for the individual.
For example, when someone applies for benefits anytime after reaching full retirement agent, there’s an option to receive up to six months of benefits in a lump sum. But there’s a cost to the lump sum option. You’re treated as though you applied to begin benefits six months earlier, so your monthly benefit is about 4% lower than if your benefits began on your intended date. The Social Security Administration’s policy is that an applicant will receive the lump sum benefit unless the applicant specifically declines it.
Another example applies to surviving spouses. A surviving spouse who has earned his or her own retirement benefit is in a unique situation. Normally an individual who qualifies for more than one type of benefit is deemed to have applied for all of the available benefits and will be paid only the highest benefit. A surviving spouse, however, can apply for only one type of benefit. Later, the individual can apply to switch to the other benefit.
A surviving spouse might increase lifetime benefits by applying first for surviving spouse benefits, allowing the retirement benefits to build to their maximum amount at age 70. Then, the individual can switch to the retirement benefits. Or the opposite scenario might be optimum. But the surviving spouse might be stymied if the application doesn’t make clear that only one type of benefit is being applied for. Otherwise, the Social Security default rule will come into play. The agency will assume all benefits were applied for, and the highest benefit at the time will be paid.
You can avoid these and other problems by making use of the Remarks section of the benefits application.
In that section, make clear the benefits you want. The remarks don’t have to be long. Usually one sentence or two will suffice to make your point so that your choices aren’t changed.
Let’s take the example of the widowed individual who wants to file only for retirement benefits now and wait to receive survivor’s benefits later when a higher amount will be paid than would be available today. In the Remarks section, the applicant should write a statement such as, “I am filing only for retirement benefits and want to exclude survivor’s benefits from this application.” That should be sufficient to ensure the intended benefits will be received.
Or suppose you are applying for benefits at age 70. You want the maximum benefit available from delayed retirement benefits. But if you aren’t clear, SSA may pay a lump sum of six months of retroactive benefits and change your monthly benefit to the benefit due at age 69 and 6 months. You should include in the Remarks section a statement such as, “I want my entitlement date to be age 70. I do not want retroactive benefits to which I might be entitled.”
The importance of the Remarks section is highlighted in SSA’s rule book, the Program Operations Manual System, or POMS, which says that an applicant may restrict the application using the Remarks section. But the statements in the Remarks section of the application must be clear and unequivocal. Any hedging or qualifying phrases will cause the statement to be ignored. A qualifying phrase is one such as “at this time” or one that explains future plans.
POMS gives, “I filed on (DATE) for all benefits for which I may be eligible except _______” as an example of a clear statement that the SSA can act on. Another example is, “I wish to exclude _______ benefit from the scope of this application.”
Once you decide on the optimum strategy for claiming Social Security benefits, your work isn’t done. You have to complete the application to ensure the benefits you want or the ones you receive, not Social Security’s idea of what’s best for you. Using the Remarks section of the application can be key to your success.