Updated: 7 days ago
By Terry Savage Chicago Tribune Mar 07, 2023 at 3:40 pm
The Social Security Administration makes mistakes. Sometimes big ones. If Social Security miscalculated and underpaid you for many years, you might never find out. But these days, many people are getting letters from Social Security saying they have been overpaid for many years.
And Social Security demands that you return such overpayments even if it is responsible for the mistake.
In many cases, these long-term errors in Social Security calculations add up to huge amounts. For example, consider the case of “Dana,” who recently posted this question on my blog at TerrySavage.com:
“In May 2021, I received a letter from Social Security stating I owe $88,734 because I was not entitled to my husband’s benefits because I collect a pension. I went through all the process with the Social Security (Administration), brought in all documents that were needed by them, and nothing was ever told to me by them that I was not able to collect. I filed an appeal but never heard from them until now!
“I am 73 and had a heart attack with a triple bypass done! I don’t want to lose my house! I have all the documents since this began almost two years ago. With COVID-19, they never would get back to me, and offices were always closed. Now they are threatening me. Please help!”
Her question shocked me, and I turned to famed economist Laurence Kotlikoff, creator of the MaximizeMySocialSecurity.com calculator and co-author of the best-selling “Get What’s Yours: The Secrets to Maxing Out Your Social Security.”
According to Kotlikoff, Dana is not alone. He told me:
“I receive emails on a routine basis from people who, out of the blue, received a letter from Social Security demanding, with no clear explanation, that they pay back previously paid benefits within 30 days! Very young children, elderly widows, retirees, spouses, divorcees, disabled workers — you name it. The bills can be in the thousands, tens of thousands, and even hundreds of thousands.
“One disabled lady was clawed back for over $300,000 for a mistake that Social Security admitted in writing was theirs! Disabled, she wrote a successful book. The woman’s ‘crime’ was receiving royalties on a book she wrote that Social Security told her, for ten years running, would not lower her disability benefits — because royalties aren’t earned income.
“When I asked Social Security for an accounting of how much money they are clawing back, I was referred to their 182-page annual report. Buried on the balance sheet, I found $8.6 billion in “receivables” that “consists mainly of moneys due to SSA from Social Security (and disability) beneficiaries who received benefits in excess of their entitlement.
“Even worse, if you don’t repay your portion of that $8.6 billion in Social Security mistakes, they almost always will stop sending you a single penny until you’ve repaid what they say you owe.”
Kotlikoff has been crusading against Social Security mistakes for years. Clawbacks aren’t the only abuse of power by Social Security. He has written about its attempts at “bribing people to forego accruing Delayed Retirement Credits and take their retirement benefits sooner than they should.” Or what he calls “the widow(er)s scam” in which Social Security simultaneously enrolls widow(er)s for both their retirement and widow(er)s benefit when doing so can only cost the claimants money, potentially hundreds of thousands of dollars.
Kotlikoff has even offered his online calculator to the government so that Social Security representatives could use its complex modeling ability to give the proper advice.
His previous public complaints, based on a Social Security whistle-blower, were the impetus for the 2018 Social Security Inspector General’s report, which called on the Social Security Administration to end its malfeasance and compensate its victims. Nothing has been done, he notes.
So, Larry Kotlikoff and I are joining together to help people deal with this one issue — Social Security’s clawbacks due to the agency’s own mistakes. If you have had benefits clawed back as a result of a Social Security mistake, please post a short description on my AskTerry blog at TerrySavage.com, including your name, email and telephone number. (Do not specify your Social Security number.)
I will not respond publicly. But I will bundle these complaints and pass them on to Kotlikoff, who promises to take them to the highest levels of government.
Maybe this time we can make a difference. That’s the Savage Truth.
(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)