The Social Security Administration has made an assumption about what retirees should want that could reduce your Social Security benefits by 4% annually. On top of that you’ll also lose out on an entire half-year of Social Security income.
How this happens is as follows. Say you come in to the Social Security office to apply for your benefits just a few months shy of your 70th birthday as you are directed to do by the SSA. You’ve decided to delay your retirement benefits until the latest possible date in order to get the most Social Security. You fill out the application. Then you go home thinking your full benefits are going to kick in when you turn 70. Much to your surprise, you receive a lump sum check for six months of what they refer to as “retroactive benefits.” You may think nothing of it or you may pick up the phone and call. If you’re a numbers person you will also notice that the amount they’ve sent is not the full amount you expected.
This is not a clerical mistake. It’s written into the directives that every agency representative must follow. Social Security's default assumption is that you want to receive retroactive benefits. This also resets your entitlement back to what it was six months prior to when you submitted your application and wipes out a half year of Delayed Retirement Credits. You also lose 4% off your monthly benefit check for the remainder of time you collect your benefits.
You didn’t ask for this retroactive act and if you don’t want to lose your full benefits, you must specifically tell Social Security not to provide retroactive benefits. You also have a one-year window to require the SSA to let you repay the retroactive amount you received, request a do-over, and claim the benefits you originally intended.
It’s pretty awful of the Social Security Administration to pull the wool over the eyes of so many unsuspecting retirees. Don’t let this happen to you. You delayed your benefits and you deserve to receive them in full.