Social Security is withholding income from seniors at the worst possible time

How retroactive Social Security benefits work

It's not just younger Americans who are struggling financially during the COVID-19 crisis; older Americans are hurting as well. In fact, in April, the unemployment rate among workers aged 55 and over was 13.6%, up from just 2.6% in January, well before COVID-19 was thought to be a local concern.

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As such, many older Americans, including those grappling with job loss, are finding themselves in the unenviable position of being desperate for money. And many are looking to Social Security to provide it. But one provision designed to supply seniors with a potentially large lump sum of cash isn't working out as planned.

How retroactive Social Security benefits work

If you're out of work and need income, you can claim Social Security at any age starting at 62. But you won't be entitled to your full monthly benefit based on your earnings history until you reach full retirement age (FRA), which, depending on your year of birth, is either 66, 67, or 66 and a specific number of months. You're also allowed to delay your filing past FRA, and for each year you do, your benefits increase by 8%, up until age 70.

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Meanwhile, if you're already past FRA but need access to more money than what your monthly Social Security benefit will provide, you're allowed to request up to six months' worth of retroactive benefits. Those benefits can only date back to your FRA, though.

Here's how that scenario might play out. Say your FRA is 66 but you decide to delay Social Security to grow your benefit. If, come age 66 1/2, you realize you need money, you can request retroactive benefits, and the SSA will pay you the benefits you could've collected over the past six months. You can only request retroactive benefits once you're beyond FRA, and if you go that route, your monthly benefit going forward will be determined based on the adjusted date of your claim.

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In other words, if you delay benefits until age 66 1/2 with an FRA of 66, but then request six months of retroactive benefits, the SSA will pay your monthly benefit going forward based on a filing age of 66. Or, to put it another way, you'll lose the boost you'd otherwise get by having waited six extra months to file. But if you're desperate for money, that may be a worthwhile sacrifice.

In fact, some seniors may be relying on this very option to access money during the COVID-19 pandemic. But now, the Social Security Administration (SSA) is reportedly withholding retroactive benefits from some seniors who may really need the income.

Specifically, the agency has seemingly adjusted its procedures temporarily with regard to retroactive benefits, and the reason could boil down to the fact that the SSA has less in-person manpower available to deal with those claims. Social Security offices have been closed to the public since March -- a move designed to protect not just employees, but vulnerable seniors who are the most likely to visit them. Without enough staff members who are equipped to deal with retroactive benefit claims, seniors who want those lump sums may, unfortunately, need to wait in line to get them.

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Staying afloat without Social Security

If you're experiencing a holdup with regard to a Social Security payout, you may have a few other options for getting your hands on the income you need. Many older Americans have a substantial amount of equity in their homes, so if that's the case, you could try borrowing against yours. Generally, that's a fairly affordable option. A personal loan from a bank could also tide you over while you wait for the Social Security income you're entitled to. Of course, your reason to claim retroactive benefits could stem from a desire to avoid debt of any kind, but unfortunately, it seems like the SSA isn't making it easy for seniors to get their hands on that money.

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