How to Keep Your Social Security Benefits Safe

By Mark G. Smith, CPA, CFP®, CLU®, ChFC®

With today's technology, your personal information and accounts are in constant danger of being hacked, including anything at the Social Security Administration. Even if you have not yet claimed your Social Security benefits, you should still check your SSA statement at least annually to make sure your earnings have been properly credited and that crooks haven't filed a bogus claim for your benefits.

While it isn't known for sure, there's reason to believe the Equifax breach that occurred between May and July of 2017 contributed to these fraudulent claims. Also, the Social Security Administration has been slow to fully react to this threat.

A Real-Life Example of a False Social Security Benefit Claim

James Shambo is a retired certified public accountant in Colorado Springs, Colorado. His story was published in a blog post on the AICPA's website in February. Shambo, 67, had planned on collecting his benefits at age 70, but received a letter from the Social Security Administration (SSA) on Sept. 11, 2017 congratulating him for claiming benefits. When he contacted Social Security about the mix-up, he was informed a lump sum had already been deposited onto a prepaid debit card on September 1.

To add insult to injury, Shambo received a Form SSA-1099 from the IRS for $19,236 in Social Security benefits in January, even though he never a penny of it.

Who Is Most Vulnerable to This Type of Fraud

Those most vulnerable to Social Security fraud are those who are eligible for benefits but have not yet filed.

  • Anyone who has reached age 62. This is the Social Security "early" retirement age. Many people fall into this category since a lot of folks between the ages of 62 and 66 (current full retirement age) have not claimed benefits.
  • Anyone between ages 66 and 70. Those in this group who have not claimed benefits face the same basic issue as the younger group, with one notable exception. Once you are beyond full retirement age, a claim filed for benefits can include up to six months of retroactive benefits in a lump sum, which is what happened to Shambo.

While there could be other situations, such as those eligible for survivor benefits or children's benefits, such cases would be harder to defraud because of the additional levels of documentation needed to claim such benefits. (For related reading, see: Social Security Fraud: What Is It Costing Taxpayers?)

How to Keep Your Account Safe

The annual review of your Social Security account should include both a confirmation that previous years' earnings have been properly posted to your account and that no one has fraudulently filed for benefits on your record. Everyone who has not yet claimed benefits should create an online account at My Social Security, which allows you to conduct your annual review more easily and makes it much harder for someone to setup a bogus account using your Social Security number since you have already done so.

If you believe your personal ID may have already been compromised or you just want to learn more about protecting your Social Security, you can visit Protecting Your Social Security. It may be tempting to claim benefits as soon as possible just to reduce the risk of a fraudulent claim, but claiming early is rarely the optimal strategy. Don't let the risk of a fraudulent claim pressure you into a sub-optimal decision.

(For more from this author, see: Social Security Benefit Claiming Changes Explained.)

Disclosure: Any information presented here is general in nature, believed to be reliable as of the date published and is not intended to be and should not be taken as legal, tax, investment or individual financial planning advice. Competent, licensed professionals should be consulted when implementing any kind of financial, estate, tax or investment strategy.

This article was originally published on Investopedia.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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