How to Protect Your Spousal Benefits From Bank and Government Mistakes

If you planned for a financially secure future and are ready to collect spousal benefits, know that things can get tricky and even frustrating. Sometimes the institutions dishing out benefits are guilty of mistakes — and it might be up to you to correct them.

Such slipups can be due to negligence or miscommunication. Or in other cases, bad advice might be a result of ignorance.

For example, a Social Security administrator might innocently give bad advice to a person who is collecting spousal benefits. That could result in the wrong outcome, said Leah Miller, a nationally certified Social Security advisor and CEO of Red Anchor Wealth Management in Charleston, S.C.

Social Security reps are there to help people file, but they are not trained or tasked with advising on specific strategies,” she said. “Nor should they be.”

Miller said one client’s recent experience at the Social Security Administration office when filing for survivor’s benefits is a perfect example of how things can go awry.

“Her intention was to take the benefits provided by her late husband’s work record and continue to receive delayed retirement credits on her own work record,” Miller said. “The representative suggested that she could receive an additional $36 per month by filing for her benefit. It was not mentioned that this method would stop accrual of delayed retirement credits.”

By contrast, Miller devised a strategy in which by delaying the benefit for a few years, the client would see the benefit increase a few years down the line by hundreds of dollars per month for the rest of her life.

Social Security and the requirements to claim benefits can be complex. That means even Social Security representatives might not always get them right. Fortunately, there are precautions you can take to protect your spousal benefits from such institutional errors.

How to Protect Against These Mistakes

The best way to get the most from your benefits is to learn as much as you can about them, said Jerry Love, a certified public accountant in Abilene, Texas, and a member of the American Institute of CPAs’ National Financial Literacy Commission. “This can come from reading material from the company or from the governmental entity providing the benefits,” he said.

Try to learn all the terms, rules and consequences of filing a claim early or late. If you need advice, reach out to an advisor “who is qualified to help you decide on these very personal and crucial benefits,” sais Chip Hollingsworth, founder of the Federal Employee Benefits Assistance Agency, LLC, based in Rainbow City, Ala.

Hollingsworth suggested consulting with a certified federal benefits advisor or a chartered federal employee benefit consultant. “I would recommend using a trained federal benefit advisor with a designation such as these two. Federal benefits are complicated compared to other corporate benefits,” he said.

Getting the right advice is crucial, he added. “Seldom are there ‘do overs’ in the spousal benefit world,” Hollingsworth said. “So if the well-meaning employee only has limited knowledge of your personal financial needs, they may advise with good intentions but with poor data.”

Keep a paper trail of every important document and all accounts. This can be key to claiming spousal benefits, particularly if you are a surviving spouse, said Love.

While both spouses are still alive, Love recommends taking the time to list everything out in detail.  He suggested taking a notebook and writing out information such as:

  • Bank account information
  • Broker information
  • Life insurance policy information
  • Where the original will is kept

“In this notebook, write down every aspect you can imagine about what they own and where key financial information can be found,” he said.

In addition to having this information, making sure that it is stored in a safe place is as equally important, according to Love.

If you clearly understand your benefits, institutional errors can be obvious to find. Do yourself a favor and do your homework before claiming what you are owed. Knowledge is power, and it can be your best defense when an error pops up.

Related: Can You Really Rely on Social Security in Retirement?