A bunch of American dollars in
denominations of 100 dollars notes rolled up and held together with a
simple rubber band with two stack of american dollars in denominations
of 100 dollars isolated on a white background.Getty
Social Security just defrauded
Seattle-based William Shimeall of tens of thousands of dollars in
widower benefits based on a decision by Social Security's Administrative
Law Judge Glenn G. Myers.
Bill's story is instructive. It teaches us a lesson we all should already know - You
can't trust anything the Social Security staff tells you. Nor can you
rely on them to keep you from doing something that can only lower,
potentially dramatically, your future benefits.It also teaches us a new lesson. Social Security's self-appointed "judges" aren't, apparently, sworn to uphold justice. Instead, they appear sworn to uphold Social Security's patently fraudulent decisions no matter the size of the swindle.
Here are the facts. Judge for yourself.
Bill Shimeall turned full retirement age on August 3, 2015. Around that time much was written, including by me and my co-authors in our book, Get What's Yours - the Secrets to Maxing Out Your Social Security, about the file and suspend option which let eligible disabled children and spouses collect child and spousal benefits without forcing the primary earner to file before age 70 and accept permanently reduced benefits.
Some high-earning spouses were also able to use this mechanism to collect spousal benefits while waiting to collect their own highest retirement benefit. People in the Obama Administration decided, with no hearings or actual evidence, that this was, on balance, a boondoggle for the rich. So in November 2015, the Democrats in the House let House Republicans rewrite the law and hide the changes inside the Bipartisan Budget Act of 2015.
I saw a draft of the bill on a Sunday. The vote was scheduled for later that week. The next morning I posted a Forbes column pointing out that the new Social Security provisions would mean benefit cuts in six months for lots of people. Within a few hours of the appearance of the column, there were two highly complex amendments passed by Congress that included grandfathering clauses, some of which still pertain to millions of people, by the way.
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Bill appears to have been one of them. He went into his local Lynnwood Social Security office, located near Seattle, Washington, in early April 2016 to discuss filing and suspending his retirement benefit so his ailing wife could start collecting a spousal benefit while waiting for her disability benefit to be approved. Bill was under the impression that by going into the office and calling Social Security before the April 29, 2016 deadline he would be viewed as having met the deadline and be given more time to complete the paperwork. April 29th was the deadline for people who were grandfathered to file and suspend and have others collect benefits on their work records. We can still file and suspend. What we can't do, if we filed and suspended after April 29, 2016, is let others collect benefits on our records while our own retirement benefit is in suspension.
Bill spoke with several different people at the Lynwood Office that day and in the ensuing weeks. Each told him something different. In any case, in early May, Bill, thinking he was grandfathered because he had gone into the Lynwood Office to discuss filing and suspending before April 29th, proceeded to file and suspend.
Thereafter, Bill had lots of confusing back and fourths with the folks at the Lynwood office to find out why his wife's spousal benefits hadn't started. But by October, his wife had been granted disability benefits, so he stopped worrying about getting her spousal benefits.
In June 2017, Bill's wife died. Bill then applied for his widower's benefit believing a) he would receive his full widower's benefit of $944 a month and b) that he could wait until 70 to collect his own age-70 retirement benefit. Instead of receiving the $944, Bill was awarded $18 per month in widower's benefits. Why? Because he had filed for his retirement benefit back in May 2016. It didn't matter that his benefit was in suspension. Nor did it matter that his filing for and suspending his retirement benefit could never have helped his wife get spousal benefits under the new law.
No, Bill had filed for his retirement benefit, so Social Security treated him as if he were actually collecting his retirement benefit and since his retirement benefit exceeded his widowers benefit he was to receive the difference, if positive, between his widower and retirement benefit. I.e., he was to receive zero. The fact that Social Security decided he was owed $18 per month was another mistake.
Bill appealed the decision saying he had been mislead by Social Security when he filed and suspended. He hadn't been told that doing so could wipe out his potential widower benefit. Given his wife's physical condition, potentially losing his widower's benefit was a real possibility. But no one at the Lynnwood office told him this in either April or May. Indeed, in early May, before filing, he contacted a top Seattle financial planner, Julie Price, who warned him that he might endanger his potential widower benefit if he filed and suspended and that he should come see her. Bill didn't want to spend the money on outside advice, so went with what the Lynnwood staff were saying and weren't saying.
What the staff should have told Bill was, It's past the April 29, 2016 deadline. You and your wife have absolutely NOTHING to gain by your filing and suspending and potentially some $40,000 to LOSE in widowers benefits if she passes in the near term.
But the staff didn't tell Bill any of this. Instead they sat back and helped him shoot himself in the head by filing and suspending, whose sole impact, they knew or should have known, would only serve to eliminate his widower's benefit were his wife to die before he reached 70.
"Judge" Myers looked at the evidence and decided that Bill had, in fact, been warned about a possible widower's benefit issue by, get this, Julie Price and should have followed Julie's advice, not what the Lynnwood staff Social Security were and weren't saying. I.e., Bill, according to the "judge," should have followed the advice not of the Social Security professionals, but of a financial advisor whom Bill didn't know.
Based on Bill's "mistake" in relying on Social Security, he, not Social Security was at fault and he must suffer the consequences. This was the 'judge's" ruling.
The injustice here is staggering. Just think about this. Due to the Lynnwood's office's clear mistake (It should have refused to process Bill's request unless he signed a paper stating that filing could only hurt him financially.), the Judge Myers not only defrauded Bill. He also defrauded Bill's wife. She worked her entire life, paid Social Security taxes her entire life, only to have those taxes be confiscated by incompetent bureaucrats and a judge who seems not to understand the requirements of the word justice.
Bill is not alone in being defrauded by the Social Security system. Social Security's Inspector General's Report of (https://oig.ssa.gov/sites/default/files/audit/full/pdf/A-09-18-50559.pdf) of February 14, 2018 documents the routine failure of Social Security staff to provide proper guidance to actual, let alone near-term prospective widow(er)s).
I wrote about this report last year. And I wrote about the problem of Social Security's defrauding widow(er)s back in 2015 based on a courageous Social Security whistle blower's inside account. Social Security has the ability to go back and determine how much money they stole from people by letting them make filing decisions or making those filing decisions for them when such decisions could only work to their detriment. Once that determination is made, Social Security should provide restitution of such stolen benefits to participants or their survivors.
But back to Bill and "Judge" Myers. Any decent Social Security judge would conclude that if the staff assists someone in filing a claim that can only lower their benefits in the future and can never raise them, under any circumstance, that the staff has clearly made an error, to put it mildly. In this case, the judge should withdrawal the filing even if it's beyond the 12-month withdraw deadline, of which Bill was also not informed.
Judge Myers, it's time to reverse your decision and stand up for the millions of widows and widowers who have been terribly defrauded by Social Security staff, either knowingly or accidentally, over the years via staff-assisted or unilateral staff decisions that served only to financially injure actual or prospective widow(er)s.
Follow me @kotlikoff To safely raise your living standard and assess your investment risk, check out MaxiFi and my company. Pls pose Social Security questions at Ask Larry.
I am a professor of
economics at Boston University, a Fellow of the American Academy, a
Research Associate of the NBER, and President of Economic Security
Planning, Inc. -- a company that markets personal financial planning
tools at maxifi.com, maximizemysocialsecurity.com,...
