If you’re not scared, you should be. Earlier in 2017 an audit of the Social Security Administration concluded that, during the past 10 years the agency paid out $1 billion (yes, billion, with a “b”) to 22,000+ recipients who didn’t even have social security numbers. And that was only the tip of the fraud iceberg.
It turns out that, like the IRS, the Social Security Administration pays out huge sums of money each year to people who are not entitled to receive it. According to Sean Brune, the assistant deputy commissioner at the Social Security Administration, nobody’s exactly sure who is getting these benefits or how much they are getting. So stopping the fraud is extremely difficult.
Despite the legal risks that come with gaming the Social Security system, thousands, if not more, do it all the time. One such fraud ring in Kentucky was recently uprooted, and it turned out that they had filed over 1,700 illegitimate Social Security benefit applications. It is estimated that just that small group, alone, may have cost the government over $500 million in improperly paid out benefits.
Many of these scammers are both creative and audacious in their illegal activities. Some common types of scams include: hiding work activities, receiving benefits after the death of a legitimate beneficiary. In 2013, alone, it was determined that over 1,500 deceased beneficiaries were still getting paid.
Thankfully, however, the agency is increasing its efforts to prevent fraud, and this is critical since it currently faces an $11 trillion (yes, trillion with a “t”) shortfall, as the baby boom generation leaves the workplace and enters the rolls of those entitled to social security benefits.
In order to cover this shortfall the agency will pull money from its trust funds. However, these funds are by no means unlimited, and best estimates are that they will be depleted by 2034.
Once those trusts become depleted the program will seriously be facing a major deficit, to the point that future recipients could receive less than 80% of the benefits they will be entitled to.
So, what is one to do? Reporting Social Security Fraud is one way to help, but that will likely be a drop in the proverbial bucket. Probably the best thing for people to do is to save as much as possible for retirement so that, even if the program’s finances do not improve, one will not be vulnerable to the shortcomings of that program.