I Don’t Get the Allure of Retroactive Benefits

Blank Social Security checks are run through a printer at the U.S. Treasury printing facility in Philadelphia, Pa., on Feb. 11, 2005. William Thomas Cain/Getty Images

I just don’t get people’s fascination with the idea of getting retroactive retirement benefits from Social Security. I can understand that, on the surface, the idea of getting a big retroactive check from the government might sound like a financial windfall.

But when you think it through, or at least when I think it through, it just doesn’t make much sense.

Before I get to today’s questions, all of which deal with claiming retroactive benefits, I must make this general point about the issue. The law says you can claim up to six months’ worth of retroactive benefits, as long as it doesn’t involve the payment of any reduced Social Security benefits. Or to put that another way, no retroactive retirement benefits can be paid prior to your full retirement age.

It’s a different story when it comes to disability benefits. But today, I’m sticking with the retirement program.

So anyway, readers are always asking me about the possibility of getting retroactive benefits. Here are some samples from this week’s mailbag.

Q: I am turning 67 in June and decided to file for my Social Security to start then. I did so online. I was amazed and thrilled when the application form gave me the option of taking six months’ worth of retroactive benefits. I jumped at the chance. I wonder why the government doesn’t promote this offer more. And for that matter, why don’t you talk about it in your column?

A: I have written about this issue many times in my column. And now I will do it again. You said you “jumped at the chance” to get that retroactive check. So, I will assume that instead of listing June as your benefit starting month, you picked January. Let me ask you this: If you wanted your benefits to start in January, why didn’t you file for them in January? Why did you let the government hang onto your money for six months and then pay it all back to you in a lump sum? With no interest, by the way.

Do you get my point? What was the possible advantage to waiting until now to file for benefits if you wanted them to start in January in the first place?

Also, I assume you realize you will be getting a slightly smaller ongoing monthly benefit. Social Security recipients get a two-thirds of 1 percent increase in their retirement check for each month they delay filing for benefits after their full retirement age. So, had you started your benefits at age 67 in June, you would have gotten an extra 8 percent tacked on to your monthly benefit rate. But by starting them in January, you will only get a 4 percent increase. Of course, you get the big retroactive check to make up for the 4 percent you lose. But I still don’t get why you didn’t file for benefits in January if you wanted them to start in January.

Q: I am turning 70 in May. I was planning to start my Social Security then. But I just learned that I could wait until I am 70 1/2 to file and then claim a six-month retroactive check. I’m planning to do that. What do you think?

A: Once again, I don’t get it. If you want your benefits to start at age 70, then file for them to start at age 70. What possible advantage could there be in waiting until six months later and then claiming a retroactive check?

Q: I am 64 years old and filed for my Social Security a few months ago. My neighbor filed for his benefits yesterday, and he was given the opportunity to claim retroactive benefits. I never got that chance. Should I call Social Security and demand to get my retroactive check?

A: Don’t bother. As I explained at the beginning of this column, retroactive benefits can only be paid if you file after your full retirement age. I bet your neighbor was over FRA. But at 64, you are under FRA, so you aren’t due any retroactive benefits.

Q: A couple of years ago, my husband used the file-and-restrict strategy. Since then, he has been getting spousal benefits on my record. He will turn 70 in October and will switch to his own benefits then. When he does that, will he be able to claim six months’ worth of retroactive benefits?

A: Well, yes, in a way. But once more, I have to wonder why he’d want to do that. To explain this more clearly, I’ll have to use an example.

Let’s say he is currently getting $1,000 per month in husband’s benefits on your record. And let’s further say that he is due $3,200 per month in augmented retirement benefits at 70 in October. (By augmented, I mean he will get a 32 percent bonus added to his check for waiting until 70 to claim retirement benefits.)

So, if he waits until 70 and makes that switch then, his $1,000 spousal benefit will stop, and he will start getting $3,200 per month in retirement benefits.

At age 70, he could conceivably say he wants six months’ retroactive benefits. In other words, it would be as if he started his benefits in April at age 69 and 6 months. Because of that, instead of getting that 32 percent augmentation, he would only get 28 percent. Let’s say that comes out to $3,000 per month. He could claim six retroactive checks at $3,000 per month, minus the $1,000 he would have already received in spousal benefits. So his retroactive check would be $2,000 per month for six months, or $12,000. But again, his ongoing rate would be $3,000 per month, instead of $3,200 per month.

But for the umpteenth time in this column, I have to ask this: If he wants his benefits to start in April at age 69 and 6 months, why wouldn’t he simply file for those benefits in April?

Those are the issues that have always puzzled me about people who get hung up on the idea of getting retroactive benefits from Social Security. If you want your checks to start this month, for example, then apply for benefits this month. Why wait six months and then claim back pay? I understand the allure of a big retroactive check. But again, you could have been getting that money all along, instead of in one lump sum.

Tom Margenau worked for 32 years in a variety of positions for the Social Security Administration before retiring in 2005. He has served as the director of SSA’s public information office, the chief editor of more than 100 SSA publications, a deputy press officer and spokesman, and a speechwriter for the commissioner of Social Security. For 12 years, he also wrote Social Security columns for local newspapers, and recently published the book “Social Security: Simple and Smart.” If you have a Social Security question, contact him at [email protected].