I wrote you a similar letter last year. But I must have been a bad boy because you didn’t grant me any of my wishes. So I’m going to try again. I think I’ve been mostly a good boy this time around. Oh sure, a few of my readers got upset with me when I said something they didn’t like. But I live by this maxim: I can please some of my readers all of the time, and all of my readers some of the time, but I can’t please all of my readers all of the time. However, I can keep all of my readers informed about the ins of outs of Social Security. And I think I did that this past year, so I should be pretty high up on your list of good little boys and girls.
And that’s why I am sending you this last-minute wish list of what I’d like to see changed about Social Security. I’m not necessarily talking about major reforms to the program. Instead, I’m talking about changing people’s misperceptions about Social Security to give them a better understanding of how the program works. Here’s an example.
Could you please get people to stop confusing Social Security with the Supplemental Security Income program? I’d guess that about half the emails I get from readers say something like this: “My wife and I are getting SSI...” or “I have a question about my SSI benefits.” But what they really mean is that they are getting, or have a question about, Social Security benefits.
I suppose most of these folks think that SSI stands for Social Security income. It does not. SSI is short for Supplemental Security Income. And SSI is a federal welfare program managed by the Social Security Administration. But it is NOT a Social Security benefit and the money used to make SSI payments comes out of the general government coffers, not the Social Security trust funds.
And it’s not just a matter of semantics. I’ve heard from more than a few readers who said they went to their local Social Security office and said they wanted to “apply for SSI” (when they meant to say Social Security) and they were sent to the side of the office that deals with welfare benefits and it took a while to work out the confusion.
Here is another wish. Please help women understand that they do not necessarily qualify for half of their husband’s (or ex-husband’s) Social Security.
I probably get a dozen letters per week from women complaining that they are not getting what they think they are due. A woman qualifies for up to half of her spouse’s Social Security only if she waits until age 66 to claim such benefits. If she takes benefits before age 66, the amount is reduced — down to about 30 percent at age 62. (Information for widows is coming up in the fourth wish.)
This is wish number three. Please tell people that they can NOT file for reduced benefits on one Social Security record and then later switch to higher benefits on another account. For example, millions of seniors think they can take benefits on a spouse’s record at age 62, and then at age 66 or 70, switch to higher benefits on their own work record. They can’t do that. The law says if you file for any Social Security benefits before age 66, you must file for any and all benefits you are due at the same time.
The flip side to that coin is the fact that people who wait until age 66 to apply for benefits, and who reach that magic age before January 2020, can file for spousal benefits at full retirement age and then at 70, switch to 132 percent of their own benefit. (That so-called maximizing strategy is being phased out. That’s why there is the January 2020 deadline.)
As I mentioned above, my fourth wish has to do with widows. You can tell them to ignore what I just wrote about the inability to change benefits. And that’s because widows have always had the option of playing the benefit switching game. For example, assuming she is not working, a woman could file for reduced widow’s benefits at 60 and then at age 66, switch to full benefits on her own work record. Or wait until age 70 and get 132 percent of her full retirement benefit.
My fifth wish is asking a lot. Please help people understand that Social Security and Medicare are two entirely separate government programs with their own sets of rules and regulations. I know they are inextricably linked because most people getting Social Security eventually end up on Medicare — and their Part B medical insurance premiums come out of their Social Security checks. And they usually have to go to a Social Security office to apply for Medicare. But once that enrollment process is over with, SSA is essentially out of the Medicare picture. And as a former SSA employee, I’m pretty much out of the Medicare picture, too. Still, thousands of people ask me complicated Medicare questions every year. Most of the time, I tell them to talk to a Medicare counselor. They are called SHIPs. That stands for State Health Insurance Program counselor. (If you live in California, they are called HICAP counselors. HICAP is Health Insurance Counseling and Advocacy Program.) To find the SHIP or HICAP counselor nearest you, go to www.medicare.gov and pull down the menu for your state under “Find someone to talk to” and then click on SHIP or HICAP.
And if that last wish was asking a lot, this final one is asking for the moon. Please get Congress to start talking about some serious long-range reform to Social Security next year. That’s going to be tough for two reasons. 1) No member of Congress likes messing around with grandma’s Social Security check. And 2) each political party must be willing to compromise. Republicans normally would never vote for any Social Security reform package that includes a tax increase. And Democrats normally would never vote for a plan that includes cuts in benefits. But here is the deal: Social Security can be made financially secure for generations with some relatively modest changes that include both. For example, if the Social Security payroll tax was raised by one half of 1 percent (the rate hasn’t changed in 30 years) and if Social Security cost-of-living increases were cut by one half of 1 percent (basic benefits haven’t been cut in 80 years), the program would be solvent until the year 2100.
Thanks for listening, Santa.
Your good little boy,