Social Security: Improvements to Claims Process Could Help People Make Better Informed Decisions about Retirement Benefits

United States Government Accountability Office Working Paper No. GAO-16-786

56 Pages Posted: 14 Nov 2016

See all articles by Michael J. Collins

Michael J. Collins

Government Accountability Office (GAO)

Mark Glickman

Government Accountability Office (GAO)

Laurel E. Beedon

Government Accountability Office (GAO)

Lilia Chaidez

Government Accountability Office (GAO)

Susan Chin

Government Accountability Office (GAO)

Joel R. Marus

Government Accountability Office (GAO)

Charles Jeszeck

Government Accountability Office (GAO)

Date Written: September 14, 2016

Abstract

Many eligible individuals claim Social Security retirement benefits at the earliest eligibility age, even though they would receive higher benefits if they waited until older ages. In order to make an informed decision about when to claim, people need to understand how various Social Security rules and other factors affect benefit amounts. Our review of nine surveys and academic studies, and interviews with retirement experts, suggest that many individuals do not fully understand key details of Social Security rules that can potentially affect their retirement benefits. For example, while some people understand that delaying claiming leads to higher monthly benefits, many are unclear about the actual amount that benefits increase with claiming age. The studies and surveys also found widespread misunderstanding about whether spousal benefits are available, how monthly benefits are determined, and how the retirement earnings test works. Understanding these rules and other information, such as life expectancy and longevity risk, could be central to people making well-informed decisions about when to claim benefits. Our observed 30 in-person claims at SSA field offices and found that claimants were not consistently provided key information that people may need to make well-informed decisions. For example, in 8 of 26 claims interviews in which the claimant could have received higher monthly benefits by waiting until a later age, the claims specialist did not discuss the advantages and disadvantages of delaying claiming. Further, only 7 of the 18 claimants for whom the retirement earnings test could potentially apply were given complete information about how the test worked. SSA's Program Operations Manual System (POMS) states that claims specialists should explain the advantages and disadvantages of filing an application so that the individual can make an informed filing decision. The problems we observed during the claims interviews occurred in part because the questions included in the claims process did not specifically cover some key information.

Keywords: Social Security, Claim

JEL Classification: D91

Suggested Citation

Collins, Michael Joseph and Glickman, Mark M. and Beedon, Laurel E. and Chaidez, Lilia and Chin, Susan and Marus, Joel R. and Jeszeck, Charles, Social Security: Improvements to Claims Process Could Help People Make Better Informed Decisions about Retirement Benefits (September 14, 2016). United States Government Accountability Office Working Paper No. GAO-16-786, Available at SSRN: https://ssrn.com/abstract=2862645 or http://dx.doi.org/10.2139/ssrn.2862645

Michael Joseph Collins

Government Accountability Office (GAO) ( email )

441 G St., NW
Washington, DC 20548
United States

Mark M. Glickman (Contact Author)

Government Accountability Office (GAO) ( email )

441 G St. NW
Washington, DC 20548
United States

Laurel E. Beedon

Government Accountability Office (GAO) ( email )

441 G St., NW
Washington, DC 20548
United States

Lilia Chaidez

Government Accountability Office (GAO)

441 G St., NW
Washington, DC 20548
United States

Susan Chin

Government Accountability Office (GAO) ( email )

441 G St., NW
Washington, DC 20548
United States

Joel R. Marus

Government Accountability Office (GAO) ( email )

441 G St., NW
Washington, DC 20548
United States

Charles Jeszeck

Government Accountability Office (GAO) ( email )

441 G St., NW
Washington, DC 20548
United States

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