Over time, changes have been made to eligibility ages, the  retirement earnings test, the FRA, and other important factors affecting  claiming. Lack of Understanding of Key Social Security Information, Along with Financial Need and Other Factors, May Contribute to Individuals Claiming Benefits Early

		Individuals Have Some Knowledge of Social Security Benefits, but Most Do Not Understand Key Program Rules and Details

Our review of survey reports and academic studies, and interviews with  people with Social Security expertise, suggest that most individuals do  not understand important rules and details that could affect their  retirement benefits or the benefits of their spouses and survivors. For  example, the publication When to Start Receiving Retirement Benefits  provides an overview of information needed to make the claiming  decision, including a discussion of the tradeoffs of claiming benefits  earlier versus later, information on life expectancy and longevity risk, how  claiming could affect spousal and survivors benefits, and the retirement  earnings test. Claims Process Sometimes Does Not Provide Key Information That Could Help People Decide When to Claim Benefits

While SSA provides important information through its website and  publications to help people make informed decisions about when to claim  benefits, our observation of the online and in-person claims process  found that some key information may not be consistently provided to  potential claimants when they file, particularly during in-person  interviews. SSA’s Program Operations Manual System (POMS) states  that claims specialists are to provide information, and avoid giving advice,  to claimants. The POMS also specifies that when taking an application for  Social Security benefits, the claims specialist is responsible for explaining  the advantages and disadvantages of filing an application so that the  individual can make an informed filing decision. Compared to the  in-person process, online applicants have more consistent access to key  information on the screen or through tabs and pop-up boxes as they  complete the application. For example, claimants were not consistently informed  that monthly benefit amounts would be higher if the claimant waited, as  specified in POMS. Similar  to in-person interviews, however, the online application process does not  inform claimants that benefits are based on the highest 35 years of  earnings; that life expectancy and longevity risk are important  considerations in deciding when to claim; and that benefits may be taxed. In addition, to ensure potential claimants are consistently provided with  key information during the claiming process to help them make informed  decisions about when to claim benefits, SSA should take steps to ensure  that: when applicable, claims specialists inform claimants that monthly  benefit amounts are determined by the highest (indexed) 35 years of  earnings, and that in some cases, additional work could increase  benefits; when appropriate, claims specialists clearly explain the retirement  earnings test and inform claimants that any benefits withheld because  of earnings above the earnings limit will result in higher monthly  benefits starting at FRA;  claims specialists explain that lump sum retroactive benefits will result  in a permanent reduction of monthly benefits. SSA  generally agreed with our recommendations. GAO staff who made contributions to this  report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

In this report, we examined: (1) the extent to which people understand  Social Security rules affecting their benefits, and other factors that may  influence when they claim retirement benefits; and (2) the information that  the Social Security Administration (SSA) provides to individuals inquiring  about claiming that enables them to make informed claiming decisions. Based on our review of studies and on expert interviews, we identified  key information categories that are central to making an informed  decision about when to claim retirement benefits. Observations of Claims Process at Field Offices and Online

We observed a demonstration of SSA’s online retirement claims process  and a nongeneralizable sample of 30 face-to-face claims applications and  inquiries at 7 SSA field offices.
Why GAO Did This Study

Many eligible individuals claim Social Security retirement benefits at the earliest eligibility age, even though they would receive higher benefits if they waited until older ages. In order to make an informed decision about when to claim, people need to understand how various Social Security rules and other factors affect benefit amounts. GAO was asked to examine these issues.
This report examines (1) the extent to which people understand Social Security rules affecting their retirement benefits; and (2) what information SSA provides to individuals to enable them to make informed claiming decisions. GAO observed a demonstration of the online claims process and a nongeneralizable sample of 30 in-person claims applications and inquiries in 7 field offices; reviewed applicable federal laws, regulations, and agency documentation; reviewed surveys and academic studies, selected in part based on expert referrals and a comprehensive review of the research literature; and interviewed Social Security experts and agency officials.

What GAO Found

GAO's review of nine surveys and academic studies, and interviews with retirement experts, suggest that many individuals do not fully understand key details of Social Security rules that can potentially affect their retirement benefits. For example, while some people understand that delaying claiming leads to higher monthly benefits, many are unclear about the actual amount that benefits increase with claiming age. The studies and surveys also found widespread misunderstanding about whether spousal benefits are available, how monthly benefits are determined, and how the retirement earnings test works. Understanding these rules and other information, such as life expectancy and longevity risk, could be central to people making well-informed decisions about when to claim benefits. By having this understanding of retirement benefits, people would also be in a better position to balance other factors that influence when they should claim benefits, including financial need, poor health, and psychological factors.
The Social Security Administration (SSA) makes comprehensive information on key rules and other considerations related to claiming retirement benefits available through its publications, website, personalized benefits statements, and online calculators. However, GAO observed 30 in-person claims at SSA field offices and found that claimants were not consistently provided key information that people may need to make well-informed decisions. For example, in 8 of 26 claims interviews in which the claimant could have received higher monthly benefits by waiting until a later age, the claims specialist did not discuss the advantages and disadvantages of delaying claiming. Further, only 7 of the 18 claimants for whom the retirement earnings test could potentially apply were given complete information about how the test worked. SSA's Program Operations Manual System (POMS) states that claims specialists should explain the advantages and disadvantages of filing an application so that the individual can make an informed filing decision. The problems we observed during the claims interviews occurred in part because the questions included in the claims process did not specifically cover some key information.
Online applicants have more access to key information on the screen or through tabs and pop-up boxes as they complete an application. However, similar to in-person interviews, the online application process does not inform claimants that benefits are based on the highest 35 years of earnings or that life expectancy is an important consideration in deciding when to claim.

What GAO Recommends

GAO is making six recommendations to SSA, including that SSA take steps to ensure that claims specialists provide information on delayed benefits that is consistent with POMS, and that the claims process provides claimants better information on the retirement earnings test. SSA generally agreed with our recommendations. recommendations.ns.ommendations.