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. Last Updated: 07/27/2016

Systems Glitch Denies Elderly Social Security

WOODLAWN, Maryland -- In a major computer snafu, the Social Security Administration has determined that 700,000 Americans have been shortchanged out of more than $850 million in retirement benefits since 1972, agency officials disclosed Thursday.


Although the Social Security Administration knew two years ago there was a glitch ticking in its computers, only recently did it determine the full extent and complexity of the problem.


The agency already is making back payments of nearly $400 million to about 402,000 retirees. Social Security officials now estimate that another 295,000 as-yet-unknown recipients, all of whom continued to work after they began receiving Social Security benefits, are owed back benefits of another $450 million.


"We think that the average amount of back benefits is going to be about $1,500 per person,'' said D. Dean Mesterharm, deputy Social Security commissioner for systems. "We need to do the right thing. So we have decided to correct this down to the last dollar.''


The fix will be too late for many retirees. More than 57,500 of the first group of 400,000 are dead, having missed out on benefits of $34.8 million.


The agency is having difficulty locating survivors and in many cases no survivors exist to accept the money. Under federal law, retirees are not entitled to back interest on any of the benefits.


The glitch involved the formula used to calculate benefits for individuals who continued to work after they began collecting Social Security -- a small portion of the 44 million Americans who will collect a total of $350 billion this year.


The agency is having difficulty locating survivors and in many cases no survivors exist to accept the money. Under federal law, retirees are not entitled to back interest on any of the benefits.


Programmers have written a new software code to make sure the error does not happen again.


The error in the formula was coded into the software system in 1972 and went undetected until late 1994 when the agency's inspector general and its office of integrity review discovered the error.


The 295,000 retirees owed back payments make up about 0.7 percent of the 44 million Social Security beneficiaries. Although the average back payment will be $1,500, some retirees could get as much as $2,000 and others might receive only a few hundred dollars.