This one is complicated, but it’s very important. According to Laurence Kotlikoff, a Social Security expert, SSA slipped a major change into their rules. Acting more or less in the dark of night, SSA altered the wording of one of their regulations. Perhaps to avoid drawing attention to what they were doing, SSA made this change only two days before last Christmas. The word changes were minor, but the consequences are not.
Essentially, SSA took away the right of people on disability to not claim retirement benefits until age 70. Disability beneficiaries might do this to increase the amount of benefits they would receive. This is due to the fact that SSA will increase your retirement benefits for every year you delay retirement from full retirement age (FRA) until 70. If a disabled person was entitled to some other benefits between FRA and 70, she might delay taking retirement benefits. These other benefits could include widow’s benefits or spousal benefits. Significantly, the option to delay retirement benefits and collect widow’s or spousal benefits is freely available to anyone who is not collecting disability benefits upon reaching FRA.
The only way for a disability beneficiary to delay taking retirement benefits at FRA is to pay back all of the money she received under disability. Clearly, no one is going to want to do that and almost no one would have the ability to come up with that kind of money all at once.
SSA administrators insist that the change in the wording of the regulations is no substantive change at all. This seems unlikely. If the regulations are the same, then why make the change? And why do it two days before Christmas when no one is paying attention? For those persons on disability benefits approaching FRA, this is a very important issue. Tens of thousands of dollars in benefits could be lost.
If this describes you, it would be wise to speak to you financial planner. It also makes sense to contact your member of Congress to ask that SSA not be allowed to get away with this sort of chicanery.
