Forgive me if you are tired of reading about the
bad advice being dispensed by Social Security representatives. But this story has a happy ending and offers some helpful, step-by-step guidance of how to help clients caught in a bureaucratic maze.
Several months ago, Jana Davis, a financial adviser in Los Angeles, wrote to me asking for help with one of her clients, a divorced woman trying to claim spousal benefits on her ex-husband's earnings record.
"I have a client who fits all of the divorced spouse criteria for receiving a spousal benefit from her ex-husband," Ms. Davis wrote. "She was married more than 10 years, has been divorced more than two years and never remarried," she wrote. "We know that half of her ex's benefit will be more than her full retirement age benefit," she added. "She is age 68 and her ex-husband has just reached his full retirement age of 66."
Ms. Davis instructed her client to apply for her Social Security benefits, expecting her to be able to collect a larger benefit as an ex-spouse than on her own retirement benefit alone. To the client's — and adviser's — surprise, the SSA representative told her she was
not eligible to collect benefits on her ex-husband's earnings record until he claimed his benefit. A supervisor confirmed that statement and suggested that the client call the agency every few months to see if the ex-husband had filed for benefits yet.
"In no instance have I come across a divorced spouse having to wait for an ex to claim benefits before they could file for spousal benefits," Ms. Davis noted. "That's a dangerous precedent."
Agreed, and the Social Security claiming rules don't work that way.
"In fact, once her ex was at least 62 years old and they had been divorced at least two years, she could file for Social Security benefits as an 'independently entitled' spouse," I responded.
As it states on
SSA.gov's website, "If your ex-spouse has not applied for retirement benefits, but can qualify for them, you can receive benefits on their record if you have been divorced for at least two years."
That means the client had already missed out on several years of spousal benefits, though she needed to wait until she was at least 66 years old to claim only spousal benefits while her own retirement benefits continue to grow by 8% per year up to age 70. I suggested that she try again to apply for Social Security benefits.
"I'm getting push back from my client due to frustration with the whole SSA process," Ms. Davis wrote. "What do you advise people who have received poor advice from Social Security not once, but multiple times?" she asked. "What is the next plan of attack when they are not sure they want to keep running into this wall?"
That's when I call in the cavalry.
"This was a classic case of bad information being given out not only by the frontline staff at Social Security but also by a supervisor," said Matthew Allen, founder of Social Security Advisors, which offers a
concierge service to financial advisers for a fee to help clients maximize their claiming strategies and negotiate with the agency when filing problems arise.
"In general, when one is confronted with what they believe to be incorrect information, it is always a prudent move to file a protective filing statement in writing immediately with the Social Security Administration and to retain a copy of this statement for one's own records," Mr. Allen said. "This way, the date of the protective filing statement can be used in subsequent filings and it will buy the filer some time to investigate further and complete the filing," he explained.
Protective filing statements expire after six months, he noted, so the exact retroactive period would depend on the specifics of the case. As the standard retroactivity of a spousal benefit is also six months, Ms. Davis's client should be entitled to at least six months of retroactive benefits and possibly more, he added.
It seems that good things do come to those who wait.
"After a year of trying to get the SSA to not only acknowledge my client was eligible for spousal benefits, but to provide proper procedure and real estimates on the benefits she was entitled to, we thought we had exhausted our options," Ms. Davis wrote. "Mr. Allen walked us through the online application process and most importantly, helped us use the proper wording for our request," Ms. Davis recounted. The entire process took less than a month.
"Not only is my client entitled to the spousal benefits as we had thought, which will be indeed higher than her own, she is also entitled to retroactive pay for the months from the time she first contacted SSA to present," Ms. Davis wrote. "Now my client will be receiving over $1,300 per month and received a $27,000 lump payment for benefits due."
I asked Ms. Davis for her advice to other financial advisers who might find themselves in a similar situation. "Don't give up and consider enlisting help."
More: Questions about new Social Security rules? Find the answers in
my new ebook.
Mary Beth Franklin is a contributing editor to InvestmentNews
and a certified financial planner.
