[V]irtually no one on Social Security knows whether their check is the “right” amount. That means every beneficiary is at risk of receiving a clawback letter, and that creates a level of insecurity that is the opposite of the purpose of the Social Security system.
That Social Security does not have a computer program that can tell its own employees as well as beneficiaries the right amount of their monthly benefit is truly amazing. What is even more surprising is that the private sector not only has a very accurate Social Security benefit calculator, it also tells viewers how to claim benefits in a way that maximizes their lifetime income.
The private calculator, developed by Boston University economist Laurence Kotlikoff, is available to everyone for $49. Yet think of how much misery could be avoided if the government created something similar – or simply leased the private program — and made it available to everyone for free.
It was Prof. Kotliioff who first discovered the problem of clawback letters.
Going forward, there are three changes that merit urgent attention. First, we need to bring Social Security’s computer systems into the 21st century. There is no reason why the country’s most important retirement system isn’t using the same software available to private financial firms.
Second, there should be a reliable online calculator that allows Social Security personnel to avoid mistakes and prospective beneficiaries to make informed judgments about claiming benefits.
Third, there should be a one-year statute of limitations on Social Security clawback claims while we are waiting to get an accurate computer system in place.
DOGE can help with the first two of these reforms. Congress is probably needed for the third.
Lambert here: How do we know that Kotliioff’s always calcu;ates the correct payment?
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