Social Security Mistake Impacted Payments to Thousands - Who's Affected

A new government report finds that the Social Security system has shortchanged some folks. Find out what to do if you suspect you are among them.

Millions of Americans count on Social Security as a cornerstone of their financial retirement plan. But a recent report found that thousands of widows and widowers have been shortchanged on survivor benefits in the past.

Find out more about what happened and what you should do if you suspect you are among those impacted.

The major Social Security mistake that cost widows and widowers thousands

An error by the Social Security Administration (SSA) resulted in 8,618 widows and widowers receiving benefits that were not properly calculated, according to the report from the federal Office of Inspector General (OIG).

The report found that SSA staffers did not apply the required Widow(er)s Indexing Computation (WINDEX) when they manually processed some claims of those entitled to survivor benefits.

An accurate calculation is crucial because it adjusts a deceased spouse's earnings record and directly affects the baseline benefit amount for the surviving spouse.

The real costs of the mistake

The errors were so significant that the average loss amounted to $5,800 per person.

Overall, surviving spouses as a group lost out on a combined $50 million, according to the report. The size of the error means some people may have struggled to make ends meet when they should have been collecting larger benefits.

The stakes are high because so many retirees depend on Social Security to get by. About 40% of older Americans receive all of their retirement income from Social Security, according to a 2020 report from the National Institute on Retirement Security (NIRS).

The SSA has noted that Social Security was never intended to be a retiree's sole source of retirement income. However, in reality, millions of seniors depend on the program for most or all of their income.

The problem runs deeper than just one mistake

The report also found that SSA staffers failed to provide complete, clear instructions about when survivors should file for benefits and how to go about doing so.

In all, an estimated 5,367 widows and widowers could have received an additional collective $114 million in benefits if they had been advised to delay retirement benefits until after collecting survivor benefits, the report found.

The average benefit loss is estimated at $21,000 per individual.

What are Social Security survivor benefits?

Survivor benefits are paid out monthly to family members of deceased individuals who qualified for Social Security benefits. Those who may qualify for such benefits include:

• Spouses
• Divorced spouses
• Children
• Dependent parents

For spouses and ex-spouses, payments typically start at 71.5% of the deceased spouse's benefit. The longer you wait to apply, the higher the percentage of the benefit you might get.

By the time you reach full retirement age — which is now 67 for most people — you are entitled to 100% of the benefit.

Who was most impacted by the errors?

The report found that those impacted by the SSA errors were most likely to have had spouses who died before the age of 62, as well as survivors who had their cases manually processed.

Up to 40% of surviving spouses may have been affected by similar errors during the period covered by the report.

How the SSA has responded to the report

The report from the inspector general recommends that the SSA identify and reimburse those who received underpayments.

The SSA says it is taking immediate steps to address the problem by reminding field office workers about the correct ways to calculate such benefits.

The agency has also said it plans to take other corrective actions.

How to get your proper benefits

If you suspect you are among those who were underpaid, contact the SSA and ask them to review your situation. Ask specifically whether WINDEX was correctly applied in your situation.

If the agency finds that an error occurred in relation to your account, you can request back pay to make the situation right.

Before you contact SSA, you might want to gather important documentation, including:

• The deceased's death certificate
• Your marriage certificate
• The Social Security numbers of both you and your deceased spouse
• Any documents you have received that show your history of claims or other important notices

Don't wait for Social Security to contact you

Although the SSA is pledging to take proactive and corrective action, it is probably a mistake to simply wait passively to be contacted.

Critics have charged that the SSA has a long history of inaccuracy and even misapplied credits. That is one reason why you are probably better off fighting for the benefits to which you are entitled instead of counting on the SSA to do the right thing.

Bottom line

In today's world of high inflation, you are probably looking at every opportunity to stretch your retirement dollars further. That is why it is crucial that you get all the Social Security money to which you are entitled.

So, if you suspect you may not have received your fair share of Social Security in the past, call the SSA or schedule an appointment at a Social Security office in your city so you can discuss the matter.