New York Estate Planning & Elder Law Blog
A recent audit conducted by the Social Security Office of the Inspector General found that the program has failed to fully pay the overwhelming majority of surviving spouses entitled to receive survivor benefits in addition to the regular Social Security benefits. According to the report, the Social Security Administration shorted $131 million to over a combined 9,000 widows and widowers aged 70 and older, or about 82 percent of those eligible.
The issue stems from a provision passed in the Bipartisan Budget Act of 2015 which ended the so-called “file and suspend” strategy which activates one spouse’s monthly benefit and suspends the other’s in order to increase payments on the delayed account after the individual reaches 70-years old. The members of Congress who passed the bill did so under the assertion those types of provisions constitute loopholes that unfairly increase payments to married couples.
However, the law was never meant to impose restrictions on couples filing a restricted application for survivor benefits where beneficiaries elect to claim their survivor benefits and delay taking their own Social Security benefits until the age of 70. This allows the widow or widower to grow their own Social Security benefits by 8 percent annually up until he or she reaches the age of 70. For those who are aware of the opportunity and take advantage of it, the increased benefits can make a tremendous difference in quality of life.
Unfortunately, the Social Security Administration did not inform widows and widowers that filing for a restricted application and accepting only their survivor benefits until their applicable retirement age would result in increased payments. The revelations are important because for many beneficiaries, their Social Security benefits could be increased substantially and allow them to pay for vital medical treatment and live more comfortable lives.
The audit determined the Social Security Administrations must improve how it communicates to widows and widowers about the option to delay taking personal Social Security benefits and instead opt for survivor benefits until which time their payments reach maximum potential at age 70. Furthermore, the audit recommended the Social Security Administration reach out to all those identified in the audit and inform them of their rights and then determine whether the agency should do the same for thousands of other widows and widowers in the same situation.