As the backlog of payment actions for Social Security beneficiaries continues to grow, the number of improper payments by the Agency is also increasing. By February 2024, the SSA’s backlog reached a record high of 5.2 million pending actions, leading to $1.1 billion in improper payments.
Inspector General Report Tracks Social Security Agency’s Performance
According to a report from the Inspector General the SSA’s backlog and pending actions have grown since Fiscal Year (FY) 2018. Although the SSA met its goals in four of the last six fiscal years (2018-2023), the backlog of pending actions still surged by 44 percent, increasing from 3.2 million to 4.6 million during that period.
Impact of Growing Backlog
As the backlog expands, many processing center (PC) pending actions remain unresolved for extended periods, leading to larger improper payments, including rising underpayments or increasing overpayments to beneficiaries.
According to the report, if SSA had resolved the pending actions as soon as possible, it is estimated that about 528,000 beneficiaries would have been identified as having received approximately $534 million in improper payments.
After 12 months of not processing these pending actions, the improper payment amount for the same beneficiaries increased to roughly $756 million.
By the time of the IG review, many of these pending actions had been unresolved for over 12 months, leading to an improper payment total of approximately $1.1 billion.
SSA Blames Record-Breaking Backlog on Staff Cuts, Surging Workloads, and Limited Overtime Funding
The SSA attributed the record-breaking backlog to unexpected staff reductions, increased workloads, and lower-than-anticipated overtime funding, which would have been used to pay employees to process more processing center (PC) pending actions.
Despite missing its annual goal only in FYs 2019 and 2022, there has been no overall reduction in PC pending actions over the past six fiscal years.
Impact of SSA Pending Actions Backlog on Seniors
Once processed, pending actions can lead to improper payments, such as delayed payments to beneficiaries (underpayments) or overpayments where beneficiaries receive more than they should.
Of the 139 cases reviewed, 17 led to beneficiaries being underpaid by $59,800, while 5 resulted in overpayments totaling $125,400.
The longer SSA takes to process PC pending actions, the longer beneficiaries must wait for their due payments or face larger overpayments to repay, as illustrated by these examples:
The average processing time for the improper payment cases in the report sample was 698 days.
Examples of Hardships Due to Underpayment
The report highlights a case where SSA underpaid a beneficiary by $6,859 due to a claims-processing error.
In November 2022, the beneficiary submitted a claim for reimbursement, and SSA approved the payment. However, the underpayment could not be issued without additional approval from another employee.
The beneficiary followed up in January 2023, and the payment was finally processed in February 2023. If SSA had secured the necessary employee approval promptly after authorizing the underpayment, the beneficiary would have received the payment 111 days earlier.
Overpayment Recovery Cases
SSA overpaid a disability beneficiary approximately $62,000 due to substantial earnings.
In June 2021, when SSA first identified the issue, the beneficiary had already been overpaid about $9,000 over 4 months. However, SSA did not begin efforts to recover the overpayment until May 2023—nearly 2 years later.
During this time, the overpayment grew by an additional $53,000. Although the beneficiary had requested a waiver of the overpayment recovery, claiming it was not their fault and they could not afford repayment, they eventually agreed to a partial repayment plan.
Overpayment Errors Had Pushed Seniors to the Brink
In March, the agency introduced a new rule aimed at reducing the burden on overpayment recipients. Previously, the SSA would withhold 100 percent of a beneficiary’s monthly benefits until the overpaid amount was fully recovered.
Under the new rule, this practice has been revised. Now, the agency will only collect 10 percent or $10—whichever is greater—of the overpaid amount from the monthly benefits to recover overpayments.
Inspector General Highlights Customer Satisfaction Concern for SSA
“Customer satisfaction has been an ongoing concern for SSA. This report continues to highlight the urgency for SSA to reach its pending actions performance goal and to ensure beneficiaries receive their proper payments as promptly as possible,” said Michelle Anderson, Assistant Inspector General for Audit serving as the Acting Inspector General for SSA.
Inspector General Urges Action with Three Key Recommendations to SSA for Reducing Backlog, Agency Agrees
The report issued by the Inspector General, Reducing Processing Centers’ Pending Actions contains 3 key recommendations
– Create a workload and staffing plan to consistently reduce the pending actions backlog each year.
– Develop performance measures for PC pending actions with specific goals to decrease the backlog annually.
– Set timeframe targets for PC workloads to minimize increases in improper payments caused by processing delays and the impact on beneficiaries.
Like Financial Freedom Countdown content? Be sure to follow us!
The 10 States Taxing Social Security in 2024 and the 2 That Just Stopped
As 2023 tax filing season draws to a close, retirees across the nation are adjusting their financial plans for 2024, but a crucial detail could drastically alter the landscape of retirement living: the taxing of Social Security benefits. While many bask in the belief that their golden years will be tax-friendly, residents in ten specific states are facing a reality check as their Social Security benefits come under the taxman’s purview. Conversely, a wave of relief is set to wash over two states, marking an end to their era of taxing these benefits. This shift paints a complex portrait of retirement planning across the U.S., underscoring the importance of staying informed of the ever changing tax laws. Are you residing in one of these states? It’s time to uncover the impact of these tax changes on your retirement strategy and possibly reconsider your locale choice for those serene post-work years. Here are the states taxing social security benefits.
The States Taxing Social Security in 2024 and the 2 That Just Stopped
Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible
Dreaming of retiring to a sun-drenched beach or a quaint village? Many Americans envision spending their golden years abroad, savoring the delights of new cultures and landscapes. However, an essential part of this dream hinges on the financial stability provided by Social Security benefits. Before packing your bags and bidding farewell, it’s crucial to know that not all countries play by the same rules when it comes to collecting these benefits overseas. Here are the nine countries where your dream of retiring abroad could hit a snag, as Social Security benefits don’t cross every border. Avoid living in these countries so your retirement plans don’t get lost in translation.
Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible
Is the 4.28% Treasury I Bond Rate Still a Wise Investment Choice?
Inflation poses a serious threat. As inflation surged in the past two years, I bonds became a secure and appealing investment choice. However, with recent lower CPI figures, the composite rate for I bonds stands at 4.28%, a decrease from the attractive 9.62% annual rate investors enjoyed in May 2022. Given these reduced rates, investors are now weighing whether to continue purchasing or to sell their existing Series I bonds.
Is the 4.28% Treasury I Bond Rate Still a Wise Investment Choice?
SECURE Act 2.0 and Its Impact on Your Retirement Savings: What You Need to Know
Three years post the transformative SECURE Act, its successor, SECURE Act 2.0, extends access to retirement plans and benefits. Updates feature automatic enrollment in workplace plans, increased catch-up contributions for seniors, and expanded savings avenues for part-time workers. It also improves emergency savings access, aiming to bolster financial security. Here’s an overview of the latest provisions impacting retirement planning in America.
SECURE Act 2.0 and Its Impact on Your Retirement Savings: What You Need to Know
Survey Reveals Americans Now Need $1.46 Million for Retirement, Up 53% Since 2020 – How Does That Compare to Actual Savings?
According to a Northwestern Mutual survey of 4,588 adults, the new ideal retirement savings goal is $1.46 million, up from last year’s $1.27 million—a 15% increase. This figure marks a significant 53% rise from the $951,000 Americans estimated they would need in 2020.
Social Security Solvency Pushed to 2035, Medicare Extended to 2036: Here’s How It Impacts You
The latest annual trustees report for Social Security and Medicare, extends the projected depletion dates for both programs. However, officials warn that without significant policy changes, these vital programs could still be in jeopardy of failing to provide full benefits to retirees.
Social Security Solvency Pushed to 2035, Medicare Extended to 2036: Here’s How It Impacts You
Retirees Struggle with New Social Security 2025 COLA Forecast at a Meager 2.63% Amid High Inflation
As we await the official Social Security cost-of-living adjustment (COLA) numbers, the Senior Citizens League (TSCL) has revised its long-term Social Security COLA forecast for 2025 to 2.63%. While this is an increase from the June 2024 forecast of 2.57%, it might not be enough for seniors struggling to keep up with inflation.
Retirees Struggle with New Social Security 2025 COLA Forecast at a Meager 2.63% Amid High Inflation
Alarm Grows as Federal Reserve’s Data Shows Sharp Increase in Household Debt and Rising Delinquency Rates
In the second quarter of 2024, total household debt soared by $109 billion to reach $17.80 trillion, according to the Federal Reserve Bank of New York. This surge encompasses credit card balances, mortgage loans, and auto loans, all peaking at unprecedented levels. Meanwhile, delinquency rates for these debt types are on the rise, prompting worries among economists and financial analysts about the resilience of the U.S. consumer-driven economy.
Retiring Early? Here’s How to Tap into Your Retirement Funds Without Facing Hefty Penalties
Typically, individuals who withdraw funds from an IRA or other qualified retirement plans before age 59.5 face a 10% early withdrawal penalty on the amount distributed. However, the Substantially Equal Periodic Payment (SEPP) method under IRS Section 72(t) allows for penalty-free withdrawals from these accounts (unless you are still employed by the company sponsoring the plan) before age 59½, avoiding IRS penalties on the distributions.
Retiring Early? Here’s How to Tap into Your Retirement Funds Without Facing Hefty Penalties
Did you find this article helpful? We’d love to hear your thoughts! Leave a comment with the box on the left-hand side of the screen and share your thoughts.
Also, do you want to stay up-to-date on our latest content?
1. Follow us by clicking the [+ Follow] button above,
2. Give the article a Thumbs Up on the top-left side of the screen.
3. And lastly, if you think this information would benefit your friends and family, don’t hesitate to share it with them!
John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
Here are his recommended tools
M1 Finance: John compared M1 Finance against Vanguard, Schwab, Fidelity, Wealthfront and Betterment to find the perfect investment platform. He uses it due to zero fees, very low minimums, automated investment with automatic rebalancing. The pre-built asset allocations and fractional shares helps one get started right away.
Personal Capital: This is a free tool John uses to track his net worth on a regular basis and as a retirement planner. It also alerts him wrt hidden fees and has a budget tracker included.
Streitwise is available for accredited and non-accredited investors. They have one of the lowest fees and high “skin in the game,” with over $5M of capital invested by founders in the deals. It is also open to foreign/non-USA investor. Minimum investment is $5,000.
Platforms like Yieldstreet provide investment options in art, legal, structured notes, venture capital, etc. They also have fixed-income portfolios spread across multiple asset classes with a single investment with low minimums of $10,000.
