Why is Social Security so Hard to Understand?

“I think we can all acknowledge that most people don’t understand Social Security, and have difficulty getting their questions answered. So, what can you do if you’re ready to consider benefits?”


Sherri Goss


I am a Certified Financial Planner and have spent months studying Social Security so I can answer client’s questions. Unfortunately, sometimes I make mistakes when explaining the benefits. Why? For the same reason that some people at Social Security sometimes make mistakes. Social Security is very complicated and technical. Add to that the fact that personal situations differ, and it’s pretty easy to inadvertently make an error.
I appreciate the comments I’ve received from the folks at the Social Security Administration regarding the article that was recently posted to Fedsmith.com. They shed new light on a few areas, and I learned two completely new facts that I had never read before. I also appreciate the questions I received directly from about 100 readers who had talked with Social Security on the phone or in person, and were still confused.
The reason I wrote the article is that people needing help with Social Security constantly approach me. And, I frequently hear stories about errors made in the advice given. Let me give you just a couple:
A gentleman came to see me about two months ago. He had just turned 66 and was going to continue working. However, his wife wanted her Spousal Benefits. He told the SS rep that he was going to wait until age 70 to take his benefits, since they would be so much higher at that time. She told him he should take them now and there was no benefit in waiting.   He came in with his statement and it showed the benefit of waiting. I sent him back to SS.
Just yesterday I received a call from a woman whose husband died last year. She is 62 years of age. She went to the local SS office, and inquired about survivor benefits. She has earned more than her husband during their lifetime, and knows that her personal benefit at full retirement age will be greater than his would have been. In addition, she would like to cut her hours back and work part-time. So, she wanted to apply for survivor benefits on his record, and then at full retirement age apply for her own, higher benefit. She was told that she could not do this.
I went to the SS web site, www.ssa.gov, and found the following:
“If you are collecting survivors benefits, you can switch to your own retirement benefits (assuming you are eligible and your retirement rate is higher than the widow/widower’s rate) as early as age 62.
In many cases, you can begin receiving retirement benefits either on your own or your spouse’s record at age 62 and then switch to the other benefit when you reach full retirement age, if that amount is higher.”
When I submitted the previous article, I accidentally left out the word “reduced” in one of my paragraphs. And in the above explanation, the word “reduced” is also missing. If you receive survivor’s benefits at age 60, the benefits are reduced, and if your deceased spouse had started receiving SS benefits before Full Retirement Age before he or she died, the survivor benefit would be a reduced (taken before Full Retirement Age) benefit on a reduced (taken before Full Retirement Age) amount. Confused yet?
Here’s another one.
Another man comes to see me, and he tells me that he retired from his job and applied for Social Security at age 62. A year later, he was offered another job and decided to go back to work. He contacted the local Social Security office, and asked what he could do since he will be working again and doesn’t need Social Security benefits at this time. He was told that there was nothing he could do as he had already applied.
This is incorrect. I told him to call Social Security and ask about suspending his benefits. He can stop his benefits and wait until Full Retirement Age to re-apply.
I think we can all acknowledge that most people don’t understand Social Security, and have difficulty getting their questions answered. So, what can you do if you’re ready to consider benefits? I suggest the following:
  1. Visit the Social Security web site, www.ssa.gov, and read all information that pertains to you before applying.
  2. Review the annual benefit statement you receive from SS. Make sure you understand it. And then use the benefit calculators that are provided on the above website so you can understand how your benefit can potentially change, based on when you apply.
  3. Understand how benefits can be reduced if you take them while you are still working and under Full Retirement Age. The amount you are allowed to earn while working is different, depending on when you apply.
  4. Understand how benefits are going to be taxed.
  5. Visit a local Social Security office and discuss any pension you will receive, and whether your benefit will be reduced due to this pension.
  6. Ask the Social Security representative about how spousal, divorced spouse, or survivor benefits work, if any of these apply to you.
  7. Before applying, meet with your financial advisor and talk through your retirement plans and the cash flow you expect to receive from different sources: Social Security, pensions, distributions from investment accounts, etc. Also talk about spousal and survivor benefits to ensure that if one spouse passes, the other is protected in retirement.
If pre-retirees take these steps, and professionals provide good information, we can all work in concert to ensure that the best retirement decisions are made. I will try my best to do my part.

Sherri Goss, CFP®, is Senior VP at Rosenberg Financial Group, Inc.  You can reach Sherri by phone at 478-922-8100 or by email.