The Social Security Administration (SSA) website states that their operations manual (Program Operation Manual System, or POMS) is “rather large.” That’s quite an understatement considering they then confess to a whopping 20,000+ pages. For a bit of context, that’s 15 times the number of pages of the average Bible and about the same as Tolstoy’s War and Peace. Not surprisingly, there are little known quirks in this complex system that can often be overlooked. This article highlights those options related to claiming retroactive Social Security benefits. Some retirees will find it beneficial to turn back the clock in order to receive large one-time checks when they first file.
Those filing after their full retirement age (FRA), age 66 for current retirees, are eligible to claim up to six months of retroactive retirement benefits back to FRA. Think of it as a six-month grace period. Some disability claimants can receive up to twelve months of retroactive benefits. Assuming you have a $2,000 benefit, six months of retroactive benefits means that Social Security sends you a big fat $12,000 check in addition to your first monthly payment.
Those of you who have not yet reached FRA can also access up to six months of prior benefits but only if you have previously contacted the SSA and expressed your intent to file. In SSA-speak, this is called filing a protective filing statement (PFS). A PFS notches a start date for benefits even if you have yet to begin claiming. Social Security officially recognizes a phone call or e-mail. But I recommend a signed certified letter sent to your local SSA office that simply says, “I intend to file for my Social Security benefits.” This may be helpful for those who are deciding between continuing to work and taking early Social Security benefits. If necessary, you can continue to refile a PFS every six months.
Claiming earlier may not be a great deal if you are trying to delay and maximize your monthly benefit, but it is often helpful for spouses or ex-spouses who forgot to file when they were first eligible. In addition, children under age 18 (or under 19 and enrolled in high school) may be eligible for up to six months of retroactive retirement benefits.
Widows, widowers, and surviving divorced spouses are eligible for up to one month of retroactive benefits. This means if you wait any longer than a month to file for survivor benefits, you will miss some payments.
The final group eligible for retroactive benefits are singles who are delaying their personal benefit until age 70. It is prudent for them to file at FRA and suspend their benefit. This file-and-suspend method, which I highlighted previously, has an unusual benefit for single filers: they can claim their suspended benefits at any time. Consider this an emergency cash reserve that can be claimed if necessary. For a single filer with a $2,000 basic benefit, this emergency reserve can equate to a $96,000 lump-sum retroactive payment.
Claiming this emergency reserve account means you lose out on a 32% higher monthly benefit earned by those who delay until age 70, but nothing is sacrificed if you do not claim it. Because there is no loss of benefits for those who file and suspend, all single filers who are planning to delay past their FRA should pursue this option.
One of the biggest fears for single filers is that they will delay and then die early. The file-and-suspend method gives you four additional years to assess your health and determine if delaying is prudent.
These retroactive benefits may not make you look any younger but they do offer lump sums of cash that could show up just at the moment they are needed.