TRANSCRIPT
Speech-to-text transcription can look a little quirky. Please excuse any grammar or spelling errors.
#45 - Listener Q&A: Social Security Fairness Act and Optimizing Social Security
Eric Blake:
Welcome to another episode of the Simply Retirement Podcast, where we want to educate and empower women to live your retirement on your terms. I'm your host, Eric Blake. On today's episodes, we're going to be answering a few more listener questions, some of which are going to be related to the Social Security Fairness Act, which we discussed back on episode 40. Also want to be sharing some updates on the Social Security Fairness Act that are pretty significant that I want to make sure that our audience is aware of, specifically those that are impacted by WEP, the Windfall Elimination Provision, and GPO, the government Pitching Offset. We've got a couple of questions on how to optimize social security, so I want to make sure we touch on those as well. And of course we've got some big announcements and updates to share with you on the show and some upcoming events. But before we get to that, I want to introduce my amazing producer, Wendy McConnell. How are you, Wendy?
Wendy McConnell:
Oh, I'm good. Thank you for having me.
Eric Blake:
So let me, hopefully I may be the first one to say this, but Happy Women's History Month.
Wendy McConnell:
Oh, thank you. Are the first one to see that.
Eric Blake:
Look at that.
Wendy McConnell:
Yay.
Eric Blake:
Yeah, so this is a big month for us. So as we're recording this, we are one day away from our big International Women's Day event.
Wendy McConnell:
Wow.
Eric Blake:
And I am stressed to the max.
Wendy McConnell:
So what does this entail?
Eric Blake:
So this entails, this is awesome. So it is stressful. There's a lot of work. We start putting this together about six months in advance, so we start working and reaching out to potential guests. So Shalanda Wagner, who was our guest on episode 39, she's our guest speaker and she's going to actually talk about her. Her story is amazing. Go back to listen to 39 if you haven't heard that one. Her story is just, it's so inspiring. So she's going to be our guest speaker, but this thing, we try to go all out. We've got local artists that are going to be participating. We're doing some sign an auction for some different art that they've been willing to donate. We are hopefully, again, no spoiler alerts here since this is actually going to come out after the event. But our hope is to generate or provide somewhere around $2,000 in donations to women focused nonprofit organizations. One of which of course is Ladder House Decor, which is Shanda's organization. We are, as a firm, going to donate a thousand dollars to her. She doesn't know it yet either, so it is going to be a surprise.
And we have what's really cool this year we did something a little bit different. We've got two members of the Dallas Symphony Orchestra cellist and a violinist that are going to be playing as well. So it's going to be fun. It's again, very stressful. It's kind of amazing that we put months of work into something that lasts about an hour and a half.
Wendy McConnell:
Well, I'm sure it will be well worth the effort, especially when you can donate some money
Eric Blake:
And we've got so much valuable, great feedback from the past participants. We've got a number of people that have been to, this will be the fourth time that they've been to the event, and this will be what I expect to be the most attended event. We have 90 women signed up, well actually lemme say 89. And then my son, since we've asked him to help with this event as well. So 89 women and one guy besides me.
Wendy McConnell:
Yeah, well, I'll attend next year. I'll put
Eric Blake:
It on my calendar. Hey, I would love Go. I'd love to come down to Texas and enjoy what at the moment was. That's the other part is this week we had just a ridiculous wind slash lightning storm on Tuesday that kind of blew everything out. We didn't have power for a day and a half.
Wendy McConnell:
Oh no.
Eric Blake:
So as we're trying to put all the final touches on our event, we're doing it without power and going to coffee shops and wherever we can find internet access.
Wendy McConnell:
Well, I'm sure it will be a big success and I'm looking forward to hearing how it all went.
Eric Blake:
Absolutely. Well, yeah, very exciting. But I also want to announce that along with that, again, this being Women's History Month, we are also are going to start our, what I'm going to refer to as our Women's Retirement Success webinar series. We're going to start that this month, starting on March 20th. If you would like details on that, you can go to www.blakewealthmanagement.com/ Women's Retirement Success. That's where we're going to have all four. It's going to be four different webinars over the next four months. So if you are interested in that, talking about primarily around retirement planning topics, retirement income planning, social security, managing healthcare taxes, all that fun stuff that I try not to nerd out too much on the podcast, but get to do that during the webinars, which you
Wendy McConnell:
Love,
Eric Blake:
Obviously. Oh, yes. I can get way into the weeds on this stuff. I try not to, but sometimes it's hard to avoid.
Wendy McConnell:
Yes, yes. Okay.
Eric Blake:
And then we've got one more big announcement, and I don't even know if you're aware of this yet or not, but you're about to be. So we are this month also making the Move to weekly podcast episodes. I did not know that.
Yes. Very exciting, very exciting. And I think what's really cool is that we've gotten, I've had a chance to get some feedback obviously through some of the listener questions through our Facebook page. And one of the things I want to do and that I'm going to do is we've had some amazing guests and honestly I think I've learned as much doing this podcast from them, from our guests as anything. But one of the things I got was some feedback on from some of the listeners about wanting a little bit more topical based episodes and specifically strategies around helping women plan for retirement. And not that we haven't done those, actually, we've done Social Security Fairness Act, we've done a number of episodes on social security, but doing things, for example, I'm going to do a series on what's called the widow's penalty, and that may be a term that people haven't heard of, but it's basically what happens when you lose a spouse, but your financial situation doesn't change a whole lot.
Your income situation may not change, but because you may be filing single instead of jointly, you might actually be pushing into higher tax bracket. There's some other factors that play into that as well. But so different episodes based on those types of issues, based on those types of challenges that a lot of women face. And for our audience and for our client base, unfortunately, we've dealt with that a lot in just the last couple of years where we've had the husband pass away and we're trying to help our client navigate these difficult decisions and challenges that they face. So definitely excited about that and hopefully you
Wendy McConnell:
Are too,
Eric Blake:
Since you're the one that helps me keep this thing moving.
Wendy McConnell:
I do, I do. I'm very excited looking forward to it.
Eric Blake:
And the other thing along with that is hopefully what I would like to really do is do maybe a monthly q and a episode, kind of like what we're doing today where we've got some questions around social security or tax planning. So same thing. If you are interested in providing a question or even suggesting a topic as we get into the weekly episodes, you can go to www.thesimplyretirementpodcast.com/ask Eric. Easy enough. Right? Yeah, sounds good. Perfect. So again, we got some questions. I'm going to have Wendy, actually, you know what, I want to do this real quick first before we get to the questions, I want to give a few updates on the Social Security Fairness Act because just since we recorded episode 40, there have been a number of significant changes. One is a little bit outdated right now, but I think it's still important to talk about February 25th.
There was the announcement that they were going to get these payments made. And so when the first one we actually, at the time we did episode 40, we had really just gotten the announcement that Social Security Ance Act had basically just been signed and the expectation, they actually posted this on the social security website that it could take a year or more before people actually started getting the retroactive payment. So again, remembering that the act was retroactive to January, 2024 on the social security website, the update page, it was actually saying it could take it up to a year or longer to actually get these payments made and for people to get their increased benefits. So that's was part of the act was if you had your benefit reduced because you had a pension from non social security covered work, you're going to get the increased benefits, whatever you call it, whatever you deserved. But it may, the expectations it might take up to a year to get
Wendy McConnell:
Those.
Eric Blake:
Well, February 25th, the big announcement that they were actually going to be accelerating those and getting that done much faster where people are actually already getting these retroactive payments to lump sum payments end of February into early March, which is when we're recording this, that those lump sum payments are coming. And then the increased benefit payments, which again are huge for so many women and so many people in our audience that those are actually going to start in April. So that is again, some big announcement that's coming directly from the Social Security Administration on the Social Security Fairness Act.
Wendy McConnell:
Okay,
Eric Blake:
So some good stuff there. Now I want to come back and I really want to emphasize one point with all this, and that is for people that did not ever apply and what I've learned in getting a number of questions, some comments on different Facebook posts that we have is unfortunately either one, that people, whether it's women or anybody, didn't apply for spousal benefits or didn't apply for survivor benefits because they didn't think they were going to get anything. So yes, they knew they had the pension. Well that pension, it's going to wipe out anything I'm going to get, I'm just not going to apply. On the other hand, you also had many, many I've heard this way more than I would've expected of people that are sharing that they were told by the Social Security Administration not to apply that you, well, you're not going to get anything because your pension's too much don't apply.
Unfortunately, that means if you have not applied in the past, you are not going to get those retroactive payments. The biggest thing you could do right now if you're under this situation where either you don't know if you've applied or you know haven't applied but you think you're eligible, is you got to make sure you get an application in as soon as possible. And we're going to share the link to the social security update page for the Social Security Fairness Act. In the notes for this episode, there's specific directions, instructions on what to do if this applies to you, where you can actually call a phone number or tell 'em why you're calling that you're calling because the Fairness Act applies to you and actually get that moving forward, get that application in the works so that you can get future benefits based on, again, the elimination. In most cases, this is going to be related to the GPO, the government pension offset where somebody may have lost a husband in the past and they may be eligible for spousal benefits. This is the best way you can get that process started is to call that number. And again, we're going to share that in the show notes as well.
Wendy McConnell:
Sounds good.
Eric Blake:
Excellent. Let's get to some questions and see what we can do to help some people.
Wendy McConnell:
Alright, so Susan wants to know when will specific information be ready regarding survivor benefits for widows Now that the Windfall Elimination program has been repealed Last year I was denied anything from Social Security because my pension is as a public school teacher.
Eric Blake:
Well, so a couple things there. So let's clarify one that when we're talking survivor benefits here, we're actually talking about GPO government pension offset, not the WEP, not the windfall elimination provision. Always remember, windfall Elimination provision applies to your own benefit getting reduced, not benefits based on a spouse based on survivor benefits in this particular case. So here most likely, again as we're recording this with these announcements that have come up over the last week or so, you should be now of aware of what your increased benefit would be. The key for this particular individual is that because she was denied, that means she's filed an application. That means at some point she filed but was denied rather than not filing at all, if that makes sense. So she's actually going to be eligible for those retroactive benefits back to January, 2024. So that is a key distinguishing factor in her question is that she was actually denied. So whatever she's eligible for, if it was completely wiped out due to her having that pension, she's going to be eligible for a lump sum Going back to January, 2024 and then starting in April, she should start receiving whatever survivor benefits she would've been eligible for. In her case, the fact that she applied but was denied is a huge fit in her favor, significant change in her favor.
Wendy McConnell:
Okay. Toby says that as a retired CSRS Fed, he's not eligible for his wife's benefits and was refused an opportunity to file and even receive a denial at the time. He says that he finally qualified for a tiny benefit based on work as a teen and post-retirement self-employment about a month before turning 70. This means that he's now going to file for widow's benefits later this month. Does the fairness act mean that he'll get benefits for 24? And
Eric Blake:
So I think this is actually a female, I think the Toby threw me off a little bit as well. I think this is actually
Wendy McConnell:
Okay.
Eric Blake:
I think we're getting where we want to go here though. So again, referring back to that last one, this is a little bit different situation. This is one of those unfortunate situations where somebody wanted to apply but we're told not to which case there's never been an actual application filed for benefits. So that's where unfortunately for the survivor benefit portion of this, there are not going to be any retroactive benefits because there was never an application filed. And that's again, an unfortunate situation where you have to just assume Social Security Administration was doing their job saying, Hey, you shouldn't apply because you're not going to receive anything. But in this case, now that the Social Security Fairness Act has been implemented, it's a negative because they're not going to get those benefits. Now if I'm understanding what she's asking though, she did qualify for some amount of social security on her own record, which means she might get some lump sum or get some retroactive benefits based on that. Kind of depends on when she filed and some other factors. So that's going to be positive, but she is going to need to again apply for those survivor benefits as soon as possible following those instructions I provided just a little bit ago. Again, we're going to share those in the show notes for the episode. You're going to want to apply as soon as possible.
Now here's what I'm going to talk about and just going to be a strategy that people want to be aware of, and this is actually going to be another episode that I want to do on some of these little hidden unknown social security strategies that so many people aren't aware of. But in her case, because she's over full retirement age, she can actually request a six month retroactive payment to have her benefits start six months retroactive. So that's one of those things that even though she's not going to get the retroactive benefits based on the Social Security Fairness Act, she might actually be able to get some additional benefits by filing for that six month retroactive option that is available for anybody. So that's something that she can consider when she does file an application for Survivor benefits is request six month in retro benefits.
Wendy McConnell:
I'll take it. Okay, so the next question is from Pat. She says, my husband and I both work under the government offset and windfall elimination when my husband retired with reduced benefits. My son, who's disabled received reduced benefits from my husband's Social Security. My son passed in 2015 and my husband in 2017, I was told I was not eligible for spousal benefits because my son had benefits. Now because of my son's disability, I was not able to accumulate enough units for my benefits. He was only 29. Has anything changed for me with the Fairness Act?
Eric Blake:
So actually a lot of pieces of this one as well. So I'll kind of touch on one part that she's referring to. I won't go too deep into the weeds on that one, but what part of what she's talking about with our son receiving benefits and her husband receiving benefits, there's something called a family maximum. And so that's where there is actually a cap on how much social security can be received by a single, by a family. So again, we'll go into the details on this particular case since even now it doesn't really apply for her. But yes, so back to the question of unfortunately being told not to apply and in this case is actually she says she wasn't eligible. She is going to be able to apply now for Survivor benefits, but she want to get that application in as soon as possible. So that was a pretty straightforward one At this point. Yes, it's definitely a positive for her that she can apply and she's going to be able to now receive those survivor benefits. But again, because she had not applied in the past, she's going to want to do that as soon as she can. Again, we don't have an indication of age on this one. So again, if she's over full retirement age, she may also be able to request that six month retroactive payment.
Wendy McConnell:
Okay, so a question from Facebook. Can you answer a couple of questions regarding the new changes? First, as a retired teacher who's receiving teacher retirement pension and could not pay into or draw Social Security myself, can I draw Survivor benefits from my husband's when he passes away? If so, how do they figure how much I will draw and at what age I can start drawing?
Eric Blake:
This is a great question and I'm going to first step back and say it sounds like if I were understanding the question correctly is that he is still living. So first part of that is she can actually apply for spousal benefits while he's still alive. So that's the one thing that she needs to be aware of. So then to go to the next question is yes, when he passes away now with the Social Security Fairness Act, she's going to be able to draw Survivor benefits based on his record, should he predecease her. So then we say, okay, well if we know that yes, she can apply, she's going to be able to receive survivor benefits, we say, well, how much can she draw and at what age? That's where we get into some of these traditional social security questions, strategic questions, and then we look at saying based on his age at the time he passes, we said, has he started Social Security or has he not started Social Security?
If he started Social Security, then you're going to be eligible for what he's receiving at the time he passes. That's the maximum, that's the a hundred percent amount. That's the first part of that. If he has not started receiving benefits, then you're going to be eligible for what he could have received at his full retirement age. So those are the potential amounts. Again, all of this is going to be dependent on when he passes. Then we get into what is your age at the time he passes. So if he passes before she's reached full retirement age, she's going to have a decision to make If she starts early, if she starts full retirement age, that survival benefit's going to get reduced by some amount. Again, the earlier she starts, the more it's going to get reduced. If she waits until full retirement age, then again she's going to get a hundred percent of whatever she's eligible for at the time.
So we can't go into a lot of specifics without knowing again what their ages are. So that's going to be the big factor. What I would encourage her to do is go back to both episode 24, which we covered spousal benefits and spousal benefits, and then episode 37 where we talked about survivor benefits and listen to those. And then based on her specific situation, that may give her a little more guidance as as far as the ultimate answer to our question, which I'm sure she just want to know, well, how much can I expect? That's how we would go about figuring that out is looking primarily at age, what his benefit is, what age he might pass, which sounds like he's still living, and then at what her age is at both now and at the time he might pass as well.
Wendy McConnell:
Okay, we have Mary, who is a disabled widow, 63 years old. She says, am I entitled to any of her husband's social security benefits? He was 61 and had not yet retired. How does the disability and widow status impact the amount? I have no idea what questions to even ask at the Social Security office.
Eric Blake:
So this is when she says it disabled, we kind of got to go on the assumption that if she's considering herself disabled, that she's receiving Social security disability benefits. So in Mary's case, we have to make some assumptions here based on her describing herself as being disabled. So I'm going to make the assumption in my response that she is receiving Social Security disability benefits. So for her, what she's looking at, if there's an advantage, it's probably a bad term to say that there's an advantage to disability benefits, but the advantage to receiving Social Security disability benefits is you can start those at disability and if you're early, if you're before full retirement age, your benefits are not getting reduced. So for example, if she's 63 now, but her full retirement age is 67, well, if she just filed for retirement benefits, it's going to get reduced because she's 63, but if she's disabled, she's going to get whatever she would be eligible for at full retirement age with no reduction.
So then for her, the answer would be, if he's passed away and she is over 60 now she's also eligible. Then for Survivor benefits, the big question is going to be what was his benefit or what is she eligible for as a survivor benefit? And that's really what she's going to want to ask. So if she were to contact the Social Security Administration, she's going to want to know what am I eligible for as far as survivor benefits? And then it's just a matter of looking at doing the typical strategic decision making around what is my benefit now, what am I eligible for as far as survivor benefits, whichever of those is greater. You're going to want to delay that one as long. Take that one second. You want to delay. So she'll have the option of switching at some point if it makes sense, but she's going to want to identify is her current benefit more or less than what her survivor benefit would be, and that will give her, then that's the information she would want to find out from Social Security is what is my survivor benefit? And then it's just a matter of doing that analysis for her specific situation.
Wendy McConnell:
So Diane says that her husband receives SSDI, he is almost 64, she is 60. If my husband passes away, can I receive his full amount survivor benefit along with my own social security when I turn 67 or maybe earlier?
Eric Blake:
So the answer, the direct answer to the question is no. So if she is over 60, she is eligible to start Survivor benefits. So if he passes, she would be eligible. But getting back to similar response to the question we just had, if he passes away, and again, it looks like he still is, so he's 63, he is almost 64 when he passes, that's when she would be eligible. But then she would need to consider what is her benefit, what is her survivor benefit, and again, ideally you're looking at choosing to delay the bigger of those two as long as possible. So if she needs the income, depending on her financial situation, she would start with her whichever one is the lowest. Start with that one first. Being aware of the earnings test, so she's under full retirement age herself, you got to be aware of what the earnings test is. So she may potentially have benefits reduced, but she would start with the lower the two benefits first and then delay the larger the benefit as long as possible, whether that be for survivor benefits, full retirement age would be 67, you would delay survivor benefits until 67. If her own benefit is larger, then she could potentially delay that all the way to age 70.
Wendy McConnell:
So whichever one you can switch is what
Eric Blake:
You're saying. You can't switch. So we're talking survivor benefit, you can't switch,
But that's the key decision point is which of the two is greater and which one would I start first and which one would I switch to down the road Again, depending on ideally, typically what you're looking at, I always say typically, because we always don't look at the specific situation, typically you want to delay the bigger the benefits as long as possible because again, you keep getting those increased benefit, increased cost of living adjustments over time so that that benefit grows until whatever that max period is, whatever that max benefit would be, depending on whether it's survivor benefits and full retirement age or her own benefit at age 70. Okay,
Wendy McConnell:
So the last question asks, I was married for 40 years, my husband and I collect our own social security benefits. We are planning to divorce and he is planning to remarry. If he dies before me, am I entitled to Survivor benefits over his new wife?
Eric Blake:
Fun question here. Okay, so being married over 40 years, actually that tells you that you're going to be eligible for benefits based on your ex-spouse. What the things that you want to look at is, again, we kind of brought up this in a couple of different scenarios. If he's planning to remarry, but you're not or you don't, you also could potentially be eligible for spousal benefits and then she doesn't indicate whether or not she's receiving spousal benefits or not. So that would be a key point is to know that if he's living, she may be eligible for eligible spousal benefits or spousal benefits. In this case, as long as she doesn't remarry, she could continue receiving those. As far as the survivor benefits, if he dies before her and assuming they're married over 40 years, we'll go with the assumption that they're over 60 years old.
Yes, she's still going to be eligible for survivor benefits and that's not going to change whether he gets married, she gets married, none of that impacts any of that. So for the fact that they were married for more than 10 years, in this case 40 and they're over 60 years old, she's going to be eligible for survivor benefits based on his record. So that's kind of a tricky question that comes up quite a bit. When you were talking about getting remarried, and that's actually was the back on episode, what 42, we talked about some of the implications for estate planning purposes, but this is one of those that they really confuses people around whether I get remarried or my husband, my ex-husband gets remarried. Any of those types of things really causes confusion. But for her, yes, you're going to be eligible for survivor benefits and it doesn't matter whether he gets married, you get married, none of that matters.
Wendy McConnell:
So the benefit doesn't get reduced if there's three other wives lined up or
Eric Blake:
No. Yeah, I think we talked about that. I'm sure we've talked about it on a couple of episodes, but again, back to the spousal benefits, I think we use the example, if you have some guy that's been married three different times, as long as each of their marriages lasted at least 10 years, none of that matters. You're still eligible. It's the 10 years that matters. Whether you have one wife, three wives, five wives, doesn't matter. So as long as that 10 year mark is met, none of that matters. And also it doesn't impact his new wife. So if they're married, he gets married and they're married for at least nine months and something happens to him, not only is our listener going to be able to receive survivor benefits based on his record, his new wife would be eligible to receive survivor benefits on his record, none of which would be reduced. Again, taking age out of the equation, they would both be eligible for the same amount, and then how much they'd actually get would be based on their own age and when they would actually file. But yeah, that's one of those nuances that again, also confuses people.
Wendy McConnell:
Yeah, I bet. So you really whipped through those questions pretty quickly.
Eric Blake:
We did. So any thoughts or questions? Anything that you feel like we need to clarify with any of that? I know that social security, it's kind of one of those things. I always say that that it's made much more complicated than it needs to be,
But it's so important. I've always said that I think social security is one of the most underrated forms of retirement income for most people, because for many people it is the single source of guaranteed lifetime income that also increases with inflation that goes up every single year based on cost of living adjustments. So making these decisions and understanding what your options are can be really critical to retirement success. I think, again, talking about the retirement webinar series that we're going to be doing kicking off this month, the second of those webinars we're going to do, this will be the one in April, we're going to be talking about savvy social security planning for women. So I would definitely consider hopping on that one.
Wendy McConnell:
All right. Sounds good.
Eric Blake:
Well, excellent. Well, thank you so much for tuning into this episode of the Simply Retirement Podcast. If you enjoyed today's conversation, don't forget to subscribe and share it with family and friends. For more resources and episodes, visit us at www.thesimplyretirementpodcast.com.
Until next time, please just remember, retirement is not the end of the road. It is the start of a new journey.
Content here is for illustrative purposes and general information only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy.
All investing involves risk including loss of principal. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.
Information here is provided, in part, by third-party sources. These sources are generally deemed to be reliable; however, neither Blake Wealth Management nor RFG Advisory guarantee the accuracy of third-party sources. The views expressed here are those of Blake Wealth Management. They do not necessarily represent those of RFG Advisory, their employees, or their clients.
This commentary should not be regarded as a description of advisory services provided by Blake Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.