Social Security announces an important change in paychecks to retirees
News Team
Social Security recently announced a major change in payroll payments to retirees, and no one wants to receive a notification with inaccuracies in their Social Security payments, so you should understand more about the planned changes. Although, in some cases, the Social Security Administration (SSA) is susceptible to making mistakes that could lead them to pay you less than you deserve, the truth is that the overall SSA team’s accuracy for underpayments in 2022 was 98.82%.
Although this is a comforting figure overall, 798.000 Americans will still be impacted. We’d call this fortunate because overpayment is significantly more complicated due to the counterpart, and it could eventually offer you headaches. Even 20 years later, you may receive a notice informing you that you received more money than you should have and that you should contact the Social Security Administration to set up a payment plan because most retirees do not double-check all of the calculations made by the agency to ensure the correct amount paid.
Even if it is a painful surprise if you were a full-time employee, it might be somewhat tolerable; however, retirees are not. While some people can still earn extra money on the side, most people will rely on their Social Security payment each month. Thus, they would have little choice except to decapitalize, liquidate assets, or agree to a payment cut. The bright side is that SSA can no longer choose to keep only 10% of your benefit instead of 100%. Even if you only need 10% of the total income to make ends meet, it could still indicate a severe issue for you.
Reasons behind the overpayment issues from the Social Security Administration
Errors in calculation stem from two main causes:
Calculation errors: when the Social Security Administration (SSA) defines the PIA (Primary Insurance Amount), the amount of money that represents your 35 highest-paid years, it serves as the foundation for determining how much each beneficiary will receive per month.
Incorrect information: when the Social Security Administration (SSA) gets inaccurate information about your annual income and the Social Security taxes you have paid. If you work for yourself, these errors may come from your employer as well. It is noteworthy that beneficiaries of Supplemental Security Income (SSI) may also experience this if they neglect to promptly disclose any changes to their financial circumstances or quality of life that could result in an improvement and, consequently, a reduction in the benefit they currently get.
How can the Social Security Administration prevent these errors?
If you are not currently retired, your best option for your job is to do an annual review of the data that has been reported to the Social Security Administration (SSA). This will allow you to identify any discrepancies and formally report any errors to the SSA. This also holds for SSI cases: it is preferable to overcommunicate rather than underreport. However, this website has additional information.
Furthermore, Social Security has submitted a new bill, which may be seen in document 89 FR 11773. The main purpose of this initiative is to establish an electronic payroll data system, also referred to as payroll information exchange (PIE). This will enable employers to comply with the law and transfer wage data automatically and instantaneously for use in SSA calculations. This will lessen the impact of manual input and unreported or late-reported information.
The system will also reduce Social Security’s administrative overhead by leveraging the automation capabilities of their processes, improving operational KPIs such as overpayment accuracy, which, according to the Agency Financial Report for 2023, was 91.98%, giving a significant 8% of recipients cause for concern. You may find additional information about this regulation proposal here.
