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Don’t Take Retirement Advice From the Social Security Administration

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Don’t take advice from Social Security Administration agents.

It might seem like a bold statement, but your clients can’t take advice from Social Security Administration agents, because they can’t give it. If they somehow get an agent to slip up and provide a recommendation—beware.

This is not meant in any way to be a knock on the agents themselves, but rather to illustrate the incredible opportunity for advisors. The government agency marks its 79th year with close to 12,000 field offices staffed by helpful and knowledgeable people, but the administration prohibits their employees from engaging in Social Security claiming advice of any kind. Agents are therefore trained in the Social Security rules, but not in claiming strategies.

Additionally, for legal reasons, agents are required to enter your clients’ information into their records on the date they inquire about Social Security benefits, even if they are not planning to begin receiving benefits until a later date. Any calculations performed are based on that date, and facilitates a bias that too often results with clients claiming early.

And let’s not forget the outcry in response to recent cutback in SSA services.

According to a U.S. Senate Special Committee on Aging report released on June 18, 2014, SSA has closed 64 field offices since 2010, the largest five-year decline in field offices in its history. Blaming budget cuts, the agency has also closed 533 temporary mobile offices that serve remote areas, as well as laid off 11,000 workers over the last three years. For the field offices that are still open, hours of operation have been reduced.

The cuts come as demand for its services has significantly increased as baby boomers prepare for retirement. The result will be longer hold times, reduced services and increased frustration, according to the bipartisan Aging report.

It couldn’t come at a worse time. This is a demographic that will largely want to speak with someone in person or over the phone about their Social Security benefits. As mentioned, too many claimants fail to realize that SSA workers cannot make recommendations or give advice, so now the cuts in service will come as a double shock.

Perhaps most worrisome is the admittedly anecdotal information we’re hearing from our clients. Many report being encouraged by Social Security employees to take their own benefit instead of a spousal benefit because they’ll get more money sooner. One client said the agent told her the break-even age for taking her spousal over her own benefit was 88. Of course, we look (as should you) at the value of a larger survivor benefit and the total of couples’ benefits, while the Social Security Administration looks at what the monthly benefit would be for each person if they were to claim as soon as possible.

Is it somehow a coincidence we’re hearing multiple reports from clients about this now? Color me skeptical. Remember, if you feel Social Security Administration employees are attempting to convince your clients to take an early benefit, be sure you’ve run the numbers and encourage your clients to stick with their decision.

After all it’s their money, their retirement and their quality of life. 


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