The use of AI (Artificial Intelligence) is growing in almost every industry. However, the use of AI in Social Security is a topic that is still being debated. Though the use of AI in Social Security will definitely help to streamline the process and reduce wait time, the role of AI in maximizing Social Security benefits is debatable.
Before we discuss the role of AI in maximizing Social Security benefits, it is important to understand how the SSA (Social Security Administration) calculates benefits. Your Social Security check primarily depends on four factors – your earnings history, work history, full retirement age and claiming age.
The first two factors are closely related. The SSA considers your 35 highest-earning years to calculate the amount of your benefits. In simple words, your benefits will be higher if you earn a higher wage or salary during your lifetime. If you worked for less than 35 years, the SSA will consider $0 for every year you worked less than 35, and this will reduce your benefits.
Talking about the third factor, your full retirement age (FRA) is the age you become eligible to receive 100% of your benefits. Your FRA depends on your birth year. The FRA for Americans born in or after 1960 is age 67.
The last factor, claiming age, is the age you actually claim the benefits. Your claiming age can have a big impact on your benefits. A person can claim their benefits as early as 62, but it is not recommended. The longer you wait to claim your benefits, the higher your monthly check will be.
AI, in simple words, involves the use of advanced software and data. Even though AI is still evolving, in some ways it may help beneficiaries in maximizing their Social Security benefits.
AI chatbots, for instance, have grown immensely popular nowadays. They can easily interact with humans and offer them quick answers to their queries. The SSA can use such chatbots to answer common questions that current and future beneficiaries may have.
Since AI chatbots are quick to use publicly available information and data to answer human queries, the SSA may also use them to assist retirees in maximizing their Social Security benefits.
For instance, AI can help future retirees understand how their benefits are calculated, and this could help in maximizing the benefits. Several studies are available online that show the right age to claim benefits.
Researchers at United Income studied the claiming decisions of 20,000 retired workers to find out if they made an “optimal” decision that maximized their benefits. The research found that just 4% of the workers optimized their claims. The finding isn’t unexpected considering no one can predict the time of their death.
Moreover, the research found that just 8% of the optimal claims were from retirees who claimed benefits from ages 62 through 64. Also, the study found that 57% of claimants would have optimized their benefits had they claimed them at 70 years.
So, AI chatbots can use such studies and historical data to help retirees in making more informed decisions on when to claim their benefits.
AI has limitations
There is no doubt that AI can use publicly available information to assist retirees, but its help may not always prove fruitful. This is because AI could fail to factor in the fact that the needs of every person are different.
No one knows you better than you. Thus, you are in the best position to decide the best age for yourself to claim Social Security.
Even though the United Income study showed that waiting until 70 years is the best age to maximize benefits, it may not be an optimal decision for someone with chronic health conditions.
In such cases, an early claim could lead to a higher lifetime payout as chronic health conditions could mean a shorter life expectancy.
Understanding the individual circumstances of each retiree is another thing that AI may fail to do. The financial needs of all families are different, and this is what AI may fail to factor in when answering questions.
Despite such limitations, AI can definitely assist current and future retirees in making an informed decision.
Areas where AI can definitely help
Though the role of AI in maximizing Social Security benefits is debatable, what we do know for sure is that there are a few areas that AI can help Social Security.
For instance, AI can definitely help in preventing Social Security fraud, a problem that has cost taxpayers billions of dollars each year. AI-powered fraud detection systems can assess massive amounts of data to locate fraudulent activity.
AI can easily identify suspicious behavior patterns to flag high-risk claims, which the SSA can investigate further. It will not only help in reducing fraudulent activity but will also result in cost savings.
Customer service is another area where AI can prove extremely useful. The use of AI-powered chatbots and virtual assistants can provide users with quick answers to all their queries, including providing updates on claims, assistance with applications and more. This would eventually result in more customer satisfaction and reduce the human workload.
AI can also prove useful with its data analytics capability. Such capabilities can help Social Security in identifying trends and patterns in data, such as tracking benefit usage, analyzing demographics, identifying areas that need improvement, and more. The SSA can also use this data to design new programs and determine funding requirements.
As with any other product, the use of AI in these areas is not without its drawbacks. Data privacy will be the biggest concern with AI as Social Security contains sensitive personal information, including Social Security numbers.
