The Consumer Financial Protection Bureau may have intended to help individuals understand the impact of their timing decision on Social Security, but a couple of Republican senators say it is providing “inaccurate and misleading” information.
Last December Sens. Richard Shelby (R-Ala.), Chairman of the Senate Banking, Housing and Urban Affairs Committee, and Mike Enzi (R-Wyo.), Chairman of the Senate Budget Committee, highlighted a number of problems with the information presented by the CFPB’s retirement planning calculator.
In a Feb. 1 response, CFPB Director Richard Cordray acknowledged that an “isolated coding error” in the calculator had been fixed, but then went on to outline the reasons why his agency’s “Planning for Retirement” tool produces results that vary from that provided by a similar tool on the Social Security Administration’s website.
“The Bureau appreciates the Committee’s concern regarding certain differences in estimates,” Cordray wrote. “We share this concern, so Bureau staff worked to ensure our tool is both informative and reliable… bureau staff was aware that our methodology for generating estimates would lead to some differences in estimates but concluded that these differences did not undermine the intended purpose of the tool, which is to show users the impact of their claiming age decision.”
Cordray said the CFPB developed its own online retirement planner in order to give prospective retirees a better look at their benefits if they decide to retire earlier or later than age 62. He acknowledged that tools like those on the Social Security Administration’s site “are generally more accurate” because they collect and rely on much more personal information about a consumer. However, “The Bureau wanted to provide an easy and quick way for consumers to obtain estimates without requiring users to provide the data,” he said.
“The Bureau created a tool that displayed the effects on the monthly benefit of claiming earlier and later without showing the additional effects from working longer,” Cordray said. “In this way, the Bureau designed a tool that provided users with readily-available information about their claiming choices, as well as benefits at different ages, while minimizing usability barriers.”
However, “The CFBP planner always displays the wrong amount for users who chose any retirement age other than the full retirement age,” the senators wrote in a letter responding to Cordray’s, calling the CFPB’s response “inadequate and unresponsive.”
“For users ages 62 through 65, the planner still computes annual benefits for the current year as the monthly amount multiplied by twelve, regardless of the user’s actual birth month. Consumers who turn 62 in January will be told their annual benefit is twelve times the monthly amount even if they wait until December to use the planner,” the senators wrote. The bottom line? The senators say that the CFPB’s retirement calculations are still off by hundreds of dollars per year for the typical worker.
