Podcast Summary: Your Money, Your Wealth Episode 536 – "Social Security vs. Pension No More"

Introduction to Episode 536

In episode 536 of "Your Money, Your Wealth," hosts Joe Anderson, CFP®, and Alan Clopine, CPA of Pure Financial Advisors, delve into significant changes affecting Social Security benefits, particularly for government employees and their spouses. The episode focuses on the newly passed Social Security Fairness Act of 2025, which eliminates the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), thereby allowing individuals to receive their full Social Security benefits alongside their pensions without reductions.

Listener Engagement: Nuke Lalouche’s Inquiry

The episode begins with a listener question from Nuke Lalouche from Northern California. Nuke outlines his and his wife’s financial situation as they approach retirement:

• Personal Background:

  • Nuke, a 53-year-old teacher, and his 57-year-old accountant wife have accumulated significant savings, including over $1 million in tax-deferred accounts, $400,000 in Roths, $38,000 in an HSA, and $90,000 in a brokerage account.
  • Nuke will receive a CalSTRS pension of approximately $7,800 per month, covering their current expenses.
  • They plan to delay claiming Social Security until age 70 to maximize benefits.

• Concern:

  • Despite qualifying for Social Security, Nuke’s projected benefit is modest ($440/month at full retirement age or $230/month at age 62) due to low earnings in earlier years.
  • He inquires whether he can claim a spousal benefit equal to half of his wife’s projected Social Security benefit ($3,570/month at age 70) under the new Social Security Fairness Act.

Notable Quotes:

• Nuke Lalouche (00:48): “I have two kids. One is launched and one almost out of college. We have two yellow labs that love a nice visit to the lake or just a simple ride in the back of the truck.”

Understanding the Social Security Fairness Act

Susan Brandeis, CFP, joins the hosts to explain the implications of the Social Security Fairness Act:

• Elimination of WEP and GPO:

  • Susan Brandeis (04:19): “The change is, is that both the windfall elimination provision and the government pension offset has been eliminated. So therefore, if you have a pension from a non-covered pension, your benefits will no longer be reduced and your spousal benefits will no longer be reduced based on that pension.”

• Implications:

  • Individuals can now receive the Social Security benefits they've earned in addition to their pensions.
  • Spousal benefits are restored, allowing spouses to claim up to half of the higher-earning spouse’s Social Security benefit without reductions.

Impact on Listener Nuke’s Situation

Big Al Clopine elaborates on how the new law affects Nuke’s potential benefits:

• Big Al Clopine (05:03): “Or if your spouse was a government employee, you didn’t necessarily get your full Social Security because of that. So that changed. Right. And so now that's gone.”

• Spousal Benefits:

  • Nuke can now qualify for a spousal benefit, potentially receiving approximately half of his wife’s Social Security benefit. This could translate to around $2,800/month, considering inflation adjustments.

• Susan Brandeis (06:03): “But you'll get half of that.”

Case Study: Sherilyn’s Experience

Sherilyn from El Cajon, California, shares her husband’s experience pre- and post-Fairness Act:

• Pre-Fairness Act:

  • Her husband, a retired city employee, received only about $150/month from Social Security due to WEP despite having sufficient work credits elsewhere.

• Post-Fairness Act:

  • After the act's implementation, Sherilyn received a retroactive lump sum of $4,700 and anticipates increased monthly benefits starting April.
  • Sherilyn’s Query (08:16): “We have been married almost 50 years. I hope you can at least answer yes without us having to make an appointment to go into the Social Security office.”

• Response:

  • Susan Brandeis (09:50) confirms that Sherilyn’s husband is now eligible for the spousal benefits based on her Social Security.
  • Big Al further explains the adjustment process: “So, it’s an extra amount he should have got for all those months that he didn’t get it.”

Notable Quotes:

• Sherilyn (08:16): “We've been married almost 50 years. Wow, Sherilyn. I hope you can at least answer yes without us having to make an appointment to go into the Social Security office.”

Clarifying Past Misinformation and Audience Feedback

The hosts address feedback from Helen, a viewer who noticed outdated information regarding WEP on their TV show:

• Helen’s Comment (13:38):

  • “This email is obviously a little bit old, but I still have this spousal benefit question regarding him. ... hi, Susan and Big Al. ... they are dispersing. ... We still don't understand the reason.”

• Hosts’ Response:

  • Acknowledgement of the error and commitment to update future content to reflect the elimination of WEP and GPO.

• Catherine’s Positive Feedback (14:11):

  • “I value the TV show and have learned a lot. Thanks. What's missing is the message that even if presented, doesn't pertain to you directly. It's important to be informed because you may be able to inform someone else. We're all in this together."

Strategic Insights and Takeaways

• Maximizing Benefits:

  • With the elimination of WEP and GPO, government employees and their spouses can now strategize more effectively about when to claim Social Security benefits.
  • Delaying Social Security benefits until age 70 can significantly increase monthly payments, enhancing overall retirement income.

• Inflation Adjustments:

  • Benefits are now indexed for inflation, ensuring that the spousal and survivor benefits keep pace with cost-of-living increases.

• Action Steps for Listeners:

  • Review personal and spouse’s Social Security statements to understand potential benefits.
  • Consult with financial advisors to adjust retirement plans in light of the new Social Security Fairness Act.
  • Utilize updated resources such as the free Social Security Handbook provided by Pure Financial Advisors.

Conclusion

Episode 536 of "Your Money, Your Wealth" provides critical updates on Social Security reforms that markedly benefit government employees and their spouses by removing previous limitations on combined pensions and Social Security benefits. Through real-life listener stories and expert insights, Joe Anderson, Big Al Clopine, and Susan Brandeis illustrate how these changes can enhance retirement planning strategies. Listeners are encouraged to stay informed and adjust their financial plans accordingly to maximize their retirement security under the new regulatory landscape.

Notable Quotes Recap:

• Nuke Lalouche (00:48): “I have two kids. One is launched and one almost out of college. We have two yellow labs that love a nice visit to the lake or just a simple ride in the back of the truck.”
• Sherilyn (08:16): “We've been married almost 50 years. ... I still don't understand the reason.”
• Catherine (14:11): “It's important to be informed because you may be able to inform someone else. We're all in this together.”

Timestamp Highlights:

• 00:00-01:00: Introduction to the episode's key topic—the elimination of WEP and GPO.
• 00:48-03:31: Listener Nuke Lalouche presents his retirement and Social Security questions.
• 04:19-08:16: Detailed explanation of the Social Security Fairness Act and its implications for Nuke’s benefits.
• 08:16-14:35: Sherilyn’s case study and discussion on correcting past misinformation, along with audience feedback.
• Post-14:35: Hosts encourage listeners to utilize updated resources and anticipate future episodes covering related financial strategies.

By addressing these critical updates and providing actionable advice, "Your Money, Your Wealth" continues to empower its audience with the knowledge necessary for informed retirement planning.