About a month ago, I wrote a column that led to some insights into the way the Social Security Administration operates. That led to more questions from more readers, and my answers in todayβs column provide even more insight.
Q: When I need help filing my taxes, I can find a wide variety of tax-preparation services, either via the computer (something like TurboTax) or one-on-one personal help (something like H&R Block). Of course, I could also deal directly with the Internal Revenue Service. But frankly, who wants to do that? Yet when it comes to dealing with Social Security, it seems I have no choice. I canβt find any private help and I have to work directly with the Social Security Administration. Do you know why that is? Is there a law that prevents businesses from offering Social Security consulting services?
A: There is no law that prevents anyone from offering to serve as a private Social Security consultant. In fact, Iβve often thought about getting into that racket myself. Itβs just that since I retired from the Social Security Administration 10 years ago, Iβve been more inclined to play Scrabble on the back porch with my wife than to sit at my desk and help people fill out Social Security forms!
If you do a Google search under βSocial Security consultants,β you will find more than a few businesses that offer such services, especially outfits that help people maximize their retirement benefits or file for disability benefits, but certainly nowhere near the number of outlets there are for tax preparation and consulting.
Part of that has to do with the institutional history of the agencies involved. From its inception, the Social Security Administrationβs business model was based on one-on-one personal service. But times are changing, and the SSA is trying to move to a more centralized system based on telephone and online service delivery. Still, the agency has 1,300 field offices in big cities and small towns across the country. I donβt think the IRS has anywhere near that number of offices. One-on-one personal service just isnβt part of their culture.
Also, of course, taxes need to be done every year, whereas for most people, filing for Social Security benefits is an once-in-a-lifetime experience.
Q: When my wife and I recently went to my local Social Security office to apply for our retirement benefits, I was shocked. I expected to find a waiting room full of grandmas and grandpas. In other words, folks like us. But instead, we saw an office full of mostly young people, crying babies, and street people. It was a surprising, and frankly, an unpleasant, experience. Is this what has become of Social Security? Are we handing out government benefits to young kids and homeless people?
A: There is a part of me that wants to sympathize with you. Thatβs the old codger in me who remembers the days when I first started working for SSA about 45 years ago. Back then, Social Security offices were downright pleasant places to visit. Waiting rooms were filled with mostly old folks there to file for retirement or widowβs benefits, with a sprinkling of middle-aged people applying for disability benefits. But then two things changed forever the way Social Security offices look and operate.
One was the expanded use of the Social Security number, especially for children. For example, I didnβt need a Social Security card until I was 16 years old and got my first job. But for many years now, even the tiniest babies need Social Security numbers. Children today need Social Security numbers for a variety of reasons (school and medical records, for example). But they primarily need an SSN so parents can claim them as dependents on their tax return. So the vast majority of those young people and βcrying babiesβ you saw in the SSA waiting room were there to either get a first-time Social Security number or replace a lost card. Iβd guess that 70 percent of the walk-in traffic you see in a Social Security office is for Social Security number and card transactions.
And the second big change was the advent of the Supplemental Security Income program in the mid-1970s. SSI is a federal welfare program (funded out of general tax revenues, not Social Security taxes) that pays a very small monthly stipend to poor older folks who are over age 65 or to poor disabled people and children. Back in the β70s, the government looked around to find a federal agency to run the program, and gave it to the Social Security Administration. So the sort of down-an-out people you see in an SSA office are usually there to file for SSI benefits.
Donβt get me wrong. People who are down on their luck have just as much right as anyone else to go to a government office. Iβm simply making the point that the SSI program has changed the nature of your local Social Security office.
Q: I am thinking about retiring. I called Social Securityβs 800 number and someone there told me my benefit rate would be $2,150 per month. But I also visited my local Social Security office and the person there told me I would get $2,130 monthly. Why the difference in benefit rates? And should I file my claim over the phone because it sounds like I will get an extra $20 per month from those folks?
A: No matter where you go to inquire about or to file for Social Security benefits, all Social Security offices and phone centers and linked to the same computer system. So you are not going to end up with a different benefit amount depending on which Social Security service outlet you use. Again, all claims, wherever they are filed, will be processed by the same system.
I can think of several reasons that might account for the different benefit quotes you received. The most likely scenario is that one outlet gave you an estimate using your most recent earnings while the other outlet, for a variety of possible reasons, did not incorporate those earnings into your estimate. When you actually file your claim, again no matter where you do so, the computer system will use all the earnings posted to your files.
