Aug 15, 2024
Social Security checks are a lifeline for millions of American retirees. But for many of them, there’s a messy catch: Uncle Sam seems to have a math problem and too frequently sends recipients the wrong amount of money — triggering financial strain and confusion.
Incorrect Social Security checks are more common than you think: The Social Security Administration processes millions of benefit payments each month, and even a small error rate in calculations or an administrative oversight can affect thousands of individuals. Some recipients have even lost their homes after the SSA attempted to claw back overpayments.
Advertisement
Former Social Security manager Ed Weir recently tackled this issue in a video on his YouTube channel, where he helps Americans ensure they’re getting the benefits they deserve.
Earlier this year, Social Security Commissioner Martin O’Malley responded to congressional pressure with a series of steps to combat the overpayment problem. Payment errors, the SSA has said, occur for various reasons, including data entry mistakes, incorrect wage reporting, and misunderstandings of complex rules governing benefits.
And sometimes, these errors may even mean you’re getting shortchanged. How can you avoid problems when the agency’s numbers don’t add up? Here are the top three reasons your check might be wrong — plus what you can do.
Incorrect earnings record
Your Social Security benefits are calculated based on your lifetime earnings, specifically the average of your highest 35 years of earnings.
Errors in your earnings record can occur for various reasons, including clerical mistakes, incorrect reporting by your employer, or even identity theft. For instance, if your employer reports your earnings under the wrong Social Security number, your record will show lower earnings than you actually had, which can significantly reduce your benefits.
It’s crucial to regularly check your Social Security statement, which you can do online through the Social Security Administration’s (SSA) website. If you spot a discrepancy, you should contact the SSA immediately to correct your record.
Must Read
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
- Vanguard reveals what could be coming for U.S. stocks, and it’s raising alarm bells for retirees. Here’s why and how to protect yourself
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Applying for the wrong program
Social Security offers several programs, each serving different needs such as retirement benefits, disability benefits, and survivors’ benefits. Applying for the wrong program can trigger a denial of benefits or getting less than you deserve.
For example, some people mistakenly apply for Supplemental Security Income (SSI) instead of Social Security Disability Insurance (SSDI). While both programs offer financial assistance to disabled individuals, they have different eligibility requirements and payment amounts. SSDI is based on your work history and earnings, whereas SSI is need-based and intended for individuals with limited income and resources. Applying for SSI when you are eligible for SSDI could result in lower benefits, as SSI payments are generally lower than SSDI payments.
Life changes
Life happens: Marriage, divorce, the death of a spouse, or the birth of a child. These can all significantly affect your Social Security payments.
Advertisement
For instance, if you get married, your benefits might change depending on whether you’re receiving your own Social Security benefits or spousal benefits. In the case of divorce, you may be eligible for spousal benefits based on your ex-spouse’s earnings. However, failing to report these changes to the SSA can result in incorrect payments.
Overpayments might occur if you continue to receive benefits you’re no longer eligible for, while underpayments can happen if you don’t apply for benefits you’re now entitled to. For example, widows or widowers may be eligible for survivor benefits, which are generally higher than the benefits they were receiving on their own record.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Get what you’re entitled to
Expecting the government to get it right doesn’t always work. Here are steps you can take to maximize your benefits and correct any errors:
Regularly monitor your Social Security account: Create an online account with the SSA to access your Social Security Statement, track your earnings record, and estimate your benefits. Regular monitoring can help you spot and correct errors early.
Review your earnings record annually: Check your earnings record at least once a year to ensure all your income is accurately reported. Report any discrepancies to the SSA immediately to prevent long-term issues.
Understand the impact of your retirement age: Your retirement age significantly affects your benefit amount. Familiarize yourself with how retiring early or delaying retirement impacts your benefits, and plan accordingly to maximize your payments.
You May Also Like
- Turning 50 with $0 saved for retirement? Most people don’t realize they’re actually just entering their prime earning decade. Here are 6 ways to catch up fast
- This 20-year-old lotto winner refused $1M in cash and chose $1,000/week for life. Now she’s getting slammed for it. Which option would you pick?
- Warren Buffett used these 8 repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)
- Here are 5 easy ways to own multiple properties like Bezos and Beyoncé. You can start with $10 (and no, you don’t have to manage a single thing)
Chris Clark is a Kansas City–based freelance contributor for Moneywise, where he writes about the real financial choices facing everyday Americans—from saving for retirement to navigating housing and debt.
