Why You Should Try to Tape Conversations With Social Security

I'm delighted that, with this column, Next Avenue will begin featuring my Ask Larry columns about Social Security advice and warnings. Future columns will run my answers to questions I receive, and sometimes just my views and insights. You are welcome to submit questions here and I hope you do.

I’ll get to this column’s topic — the importance of taping your conversations with Social Security, if you can — momentarily, but first I want to tell you a little about my expertise, so you know why reading Ask Larry will be worth your while.

I’ve been writing about Social Security for years. My columns have appeared on PBS NewsHour, Forbes and The Huffington Post. Paul Solman, of PBS NewsHour, suggested we write a book about claiming Social Security benefits and we did, after teaming up with Phil Moeller, a personal finance columnist with Money: Get What’s Yours came out last year and became a New York Times bestseller.

I became a student of Social Security out of necessity. I needed to help my company's engineers program our Maximize My Social Security software. I had done lots of research on Social Security's economic impacts on saving and retirement; that required 30,000-feet knowledge. Still, I thought there was little I didn't know about the system's details. Boy was I surprised when I got down to earth.

Over the years. I've learned three very dark secrets about Social Security.

First, Social Security may be the most complex government policy yet designed by man. It has 12 different benefits, but is chock full of hidden secrets and gotchas that make collecting what you're owed a user's nightmare. Second, most people don't do their homework before approaching Social Security's 40,000 poorly trained and totally overwhelmed staff, over the phone or in the local office. Third, in my opinion, Social Security staff bats only 50 percent. Half of their answers are misleading, incomplete or dead wrong.

Which brings me to today’s topic: How to keep Social Security from ripping you off.

Social Security's mistakes can be enormous and you can be held accountable for them.

I recently wrote a column entitled 3 True Social Security Horror Stories. The first was about a lady who became disabled and started receiving Social Security disability benefits. She then took up writing to occupy her time. To her great surprise, she wrote a best selling children's book in 1996 and started receiving royalty checks. As the checks came in ever six months, she'd contact Social Security in person or over the phone and each time she was told: royalty checks are earned income, so you can keep your monthly disability benefit.

Fast forward 10 years. She receives a bill in the mail for $309,000 with a letter from Social Security saying that they shouldn't have paid her the disability benefits because she had given some talks to promote her book (which she had told Social Security about), so the royalty checks were earned income. Social Security had made a mistake, they acknowledged, but she still owed $309,000 and would she please pay up immediately?

The lady appealed, ending up in front of a Social Security appeals judge who, naturally (given his paymaster), ruled for Social Security and decided, after reviewing her credit card bills, that taking the $309,000 from this low-income person was OK because "she has an expensive cable plan."

This is among the horribilist (Her Majesty coined this term!) horror story I've yet uncovered. But, financially speaking it's not the worst.

Widows have been signed up by Social Security, without their clear knowledge, to take both early widows and early retirement benefits starting at age 62. This deprived them of collecting hundreds of thousands of dollars in lifetime Social Security benefits by simply waiting until age 70 to take their 76 percent higher (after inflation) retirement benefit.

The people impacted by this mistake typically have no recourse at age 70 because they have no record of what was said at their meeting with Social Security 10 years early.

My most recent horrible Social Security stories come from the Social Security Administration telling its staffers (via email and a web posting) incorrect/incomplete information about who was grandfathered under the recent law regarding the ability to “file and suspend” benefits. The agency did this for four months between November 2, 2015, when the law was signed, and February 18, 2016, when I spoke to four top brass at Social Security in a conference call and insisted they were misinforming their staff who were denying people benefits to the tune of up to $60,000.

They then emailed an urgent set of revised instructions and changed their website within 24 hours. But the fallout from their mistake continues.

Here are two more examples that came across my transom in the last two weeks:

One couple went to Social Security in mid-November 2015. The wife filed for her retirement benefit and immediately suspended it. She was 66 and within the recent law’s April 29, 2016 deadline to do this. But then Social Security staff told her she was making a mistake (they did this based on the false instructions sent from headquarters).

They told her that her then 63-year old husband had to be 66 by April 29, 2016 to be able, when he turned 66, to collect just a spousal benefit for four years while letting his own retirement benefit grow to its highest value at age 70. The wife then withdrew her request, only to now discover that Social Security was wrong and that she had it right; her husband just had to be 62 before January 2, 2016 to be able to follow this file and suspend strategy.

Social Security's mistake has cost this couple about $60,000.

Another couple that wanted to pursue the file and suspend strategy also visited Social Security in November. The husband was 66 and the wife 64. He was mistakenly told that he was grandfathered into the law and didn't have to file and suspend early. What he wasn't told is that he had to file and suspend by April 29, 2016. In May, the husband learns about the deadline, goes back to Social Security and is told, “sorry, you're too late.” This couple just lost about $45,000 — again all due to Social Security's mistakes.

Both of these couples can spend years appealing Social Security's mistakes. But can they prove them? Can either couple demonstrate that they were misinformed? As far as I can tell, the answer is no.

So here's the moral to this sermon: Tape Record Your Conversations With Social Security — Whenever Possible. You'll often want to ask for consent first, though, as you'll see shortly.

Whether you call Social Security on the phone or go to an office, I really think it pays to tape the conversation, if you can. You can put a recorder next to your phone or in your pocket when you are in the office.  This will provide you a basis for filing an appeal to recover lost benefits if Social Security makes a mistake. It's the only way I can think of to protect yourself.

Under federal law, you can record a phone call without telling the person you’re recording; it’s called “one-party consent.”

But 11 states require the consent of both parties (California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Montana, New Hampshire, Pennsylvania and Washington, according to the Digital Media Law Project.) So if you live in one of those states, you need to get permission and there’s a pretty good chance Social Security staffers there won’t agree to letting you tape them. Sometimes, it's not where you live that matters, it's where the call is being taken. So unless you know for sure that you don't need consent from the other party to tape a conversation, ask for the consent before you tape a call.

Yes, taping the conversation is extreme advice, but you do not want to be powerless in facing Social Security's bureaucracy when it is your word against theirs and tens of thousands of dollars hang in the balance.

Let me end my sermon by saying that I think most Social Security staffers are well meaning. But they are underpaid and overworked and stressed beyond belief.

Congress has underfunded Social Security administrative costs and there have been major cutbacks in the number of staff, the number of offices, office hours, you name it. Training also seems to have gone down the tubes.

What I find most dismaying is the absolute surety with which Social Security staff will tell you the completely false answer.

I recently called Social Security on behalf of one of my company's clients. I politely introduced myself and explained that I thought she was making a mistake based on mis-instructions from Social Security headquarters that had been corrected. Those were the only words I got out for the next half hour.

The lady started screaming at me, saying that she knew what she was doing and asking who was I to question her. At the end of a half hour, she said she was going to hang up because she had to leave. I said I understood, but that I wrote about Social Security and would write up our conversation the next day and include her name and the name of her office. She hung up.

Ten minutes later, she called back to apologize. She had checked and I was right. I wish I had taped the call. Next time I will.

Laurence J. Kotlikoff Laurence Kotlikoff is a co-author of “Get What’s Yours from Social Security” and a professor of economics at Boston University. Read More