The SSA isn’t, in the cases I’ve directly heard about, telling people that the values of their own and their family members’ lifetime benefits will be reduced if they file early.

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Jim Cornfeld, a certified financial planner in St. Louis who manages a wealth-adviser network that uses my company’s Social Security software, sent me the following email. Let me share my answer.



An adviser in our network told me that one of his clients, turning 70 this August, received a call from the Social Security Administration (SSA) telling him that if he filed for his Social Security retirement benefits as of November 2016, they would pay him $19,742.80 for the six months that he did not receive benefits. If he chose to continue with his benefits suspended until age 70, it would take him 10 years to make up the difference. Based on this, the client told the SSA to begin his benefits as of last November and send him the check, which it did. We had previously recommended that he file at age 70.

At first, I thought that it was a scam, but the client did receive the $19K. I’m surprised that people don’t just hang up on the SSA, thinking it is a scam.

Anyway, this was not in the best interest of the client, since he was the high-wage-earner and his wife is nine years younger. We will have him file a Form SSA-521 to withdraw “his” application for his retirement benefits and repay the benefits he received.

Have you heard of this happening before, where the SSA is calling people to solicit them to file early?

Best regards,



Dear Jim,

This is, indeed, a scam being run by the Social Security Administration. Social Security appears to be calling everyone who is trying to maximize their retirement benefit (by filing at 70) and bribing them to file early.

It’s a scam for five reasons. First, the SSA isn’t, in the cases I’ve directly heard about, telling people that the values of their own and their family members’ lifetime benefits will be reduced if they file early. In this client’s case, the loss will be not six, but nine months of delayed retirement credits (DRCs) — meaning a 6 percent smaller benefit each year.

Second, the SSA isn’t telling people how much their family’s lifetime benefits will fall. To do so, the SSA would need to understand how to value these lifetime benefits, which from everything I can tell, it doesn’t. I used a computer program to calculate the maximum amount that taking Social Security’s deal could cost this client. It’s over $22,000! That’s huge.

Third, the SSA isn’t telling people that filing early will permanently reduce not only their own monthly check, but also the widow’s benefit that their lower-earning spouse will collect if they die first. Fourth, it isn’t telling people that they will need to wait until Jan. 1 to collect the DRCs accrued in the year they file if they file before reaching age 70. (For example, if you file at age 69 and 11 months in, say, July, you don’t collect the DRCs for the preceding six months until Jan. 1 rolls around.) Is Social Security intentionally scamming the public?


Getting people to file early saves the system money. The reason is that the DRCs were established when interest rates were higher and survival rates lower. So, Social Security is overcompensating people for waiting until 70 relative to what’s actuarially fair.

But if Social Security realizes it’s making money with its bribes, it should be honest and say, “Listen, we are calling you with a lousy offer. If you take it, you can pocket some money right away, but it will cost you over time. But, here’s the thing. The system’s broke. It’s 32 trillion in the red if you look at table VIF1 in the 2017 Social Security Trustees Report. So please help us out. We need the money more than you.”

Alternatively, Social Security is scamming people unintentionally. From everything I can tell, Social Security doesn’t know what business it’s in. When it comes to retirement benefits, it’s in the longevity insurance business. By letting people wait to file for higher benefits, Social Security is letting them buy extra longevity insurance — a higher long-term benefit that will be invaluable if they don’t die, in exchange for a premium, paid in the form of receiving zero benefits in the short term.

Imagine a life insurance company calling customers and saying, “Chances are, you won’t be dying soon. So, please return your premium and we’ll cancel your policy?” The CEO of that company would be instantly fired. Maybe that should happen to the people running Social Security.