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The U.S. Social Security Administration (SSA) has hoodwinked retirees out of $140 million in benefits.
They say it was by accident – but to us, that seems suspect.
The SSA has victimized a distinct group of retirees, though not a small U.S. demographic by any means.
Here's who's affected by this Social Security mishap, and how to avoid falling prey to it yourself…
Social Security Shortchanged These Beneficiaries
On Feb. 7, the SSA's Office of the Inspector General (IG) announced that some 9,224 widow and widower beneficiaries age 70 and above have been underpaid by approximately $131.8 million.
The audit did not reveal the timeframe during which its samples were taken.
The report also estimated that Social Security will underpay 1,899 future beneficiaries by some $9.8 million once they turn 70.
In both cases, that amounts to between $5,000 and $15,000 in benefits per retiree.
These estimates are based on a random sample of 50 beneficiaries who are dually entitled to survivor benefits plus their own.
The agency failed to make 41 (82%) of the beneficiaries aware that delaying their applications could result in more money later on, according to the IG's report.
Although survivor benefits do not increase if you apply later in life, normal retirement benefits increase by 8% per year for every year they are delayed beyond full retirement age (66 or 67, depending on the year of birth) up to age 70.
But in 41 out of 50 cases, the SSA didn't see fit to provide that information to retirees.
The IG concluded that the SSA needs to impose controls to ensure it properly informs widows and widowers of their option to delay their application for retirement benefits moving forward.
Just what those controls might be wasn't specified.
But we don't recommend waiting around for the agency to fix its kinks and help you out.
Here's how you can look out for yourself…
Be Your Own Social Security Representative
When you apply for Social Security – if you've not already done so – it's important to ask the SSA rep several critical questions.
For instance, ask the rep if you can withdraw your application after filing if an unforeseen circumstance comes up that won't allow you to retire just yet.
(The answer is almost always yes – you have 12 months to do so, but there are exceptions.)
Another commonly overlooked question: whether or not you will still have to pay Social Security taxes on any earnings after full retirement age.
(The answer is most likely yes, you will still have to pay, but there are religious exemptions for individuals that we're betting SSA reps won't "remember" to tell you about.)
There are lots of ways to make certain you're prepared to live the fullest retired life possible – even if you're already retired.
In fact, Money Morning Technical Trading Specialist D.R. Barton, Jr.'s 10-Minute Millionaire Pro research service comes with a special report explaining 16 secret Social Security "loopholes" that could help you earn thousands more each month in retirement – or ahead of retirement.
To learn more about his investing strategy, you can get all the details right here.