Social Security vs. Pension No More - 536

Summary

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.

Transcript

[Andi Last]

If your pension impacted your ability to collect Social Security benefits, 2025 is a very good year for you and your spouse. The windfall elimination provision and the government pension offset are no more and you're now eligible for your full Social Security benefits and your pension. I'm executive producer Andi Last today on a quick you Money, you wealth podcast number 536. While Joe hangs out in the North Star State, Big Al Clopine explains what the Social Security Fairness act means for Sherilyn and her husb nuke Lelouch and his wife with the help of our special guest co host Susan Brandeis, CFP Got a money question or need a retirement spitball analysis? Click or tap Ask Joe and Big Al in the episode description and send it in as an email or a voice message like this one Hello Joe.

[Nuke Lalouche]

Big Al and Andy. My wife and I live in Northern California. I love the show and I've learned a lot. I usually listen while I'm exercising before work or driving on the weekends to our cabin. You've taught me a lot and I'm better off for having found your podcast. First, the important stuff. I drive an F150 and my wife drives a Jeep Wrangler hybrid. I enjoy a hazy IPA or maybe a rum or tequila based cocktail or even a Moscow Mule. Just depends on the mood. My wife enjoys a nice Chardonnay. I'm A teacher age 53 and wife, age 57 is an accountant. I've spent most of my career coaching middle school sports and my dear wife enjoys volunteering with local children charitable organizations. 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. When I retire, probably in seven more years, I will have a CalSTRS pension. That alone will cover right around 100% of our monthly expenses. The pension will be about 7, $800 per month and that's right about what our monthly expenses are. And this doesn't include my wife's Social Security, which we plan on delaying until age 70. My question is about the newly passed Social Security Fairness Act. I have put in enough quarters to qualify for Social Security benefits, but it was at a low income rate when I was younger and my projected benefit at full retirement age is around $440 per month according to the Social Security website, and $230 if I take it when I am 62. Here's my question. Do I qualify for taking the spousal benefit when my wife decides to turn on her Social Security benefit, would that be the larger of my tiny amount or half of her benefit? Before the law was passed, me getting a benefit for my years put into the system was just a pipe dream. But now I'm wondering if I would really be able to qualify for the spousal benefit, which could be half of her benefit of $3,570 per month if we wait till age 70. I think our retirement plan works without this, but with it, it obviously factors into our future planning. Our portfolio consists of a little over a million in tax deferred, $400,000 in our Roths, 38,000 in an HSA and $90,000 in our brokerage. We're good savers and I will max out the 403B this year and we will continue to max out our personal Roths as we are able because we're right up against that income limit. I think we're on track for a successful retirement. But if you could give me some insight about the spousal benefit of Social Security as it applies to me, I would appreciate the spitball. Thanks so much.

[Andi Last]

And that is from Nuke Lalouche, which I believe is a reference to the movie Bul Durham, played by a guy, Tim Robbins.

[Big Al Clopine]

I think you're right. I think it was Tim Robbins. I think he was maybe a pitcher or something. If I remember. I used to love that movie. Been a baseball guy myself. But yeah, love, love the name Nuke Lalouk.

[Andi Last]

And now apparently he's trying to figure out his Social Security strategy.

[Big Al Clopine]

Yeah, well, you know what, when I saw the movie I was young and now I'm not as young. So there you go. So I guess it's appropriate. Yeah. So anyway, okay, so he's talking about. So there's a new Social Security Fairness act that was signed in January of this year, 2025 that really kind of changed a couple things about Social Security and strategies for government employees or for spouses of government employees. And Susan, maybe you can sort of go over what, what happened, what the change was.

[Susan Brandeis]

Yeah. So 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, you1, your benefits will no longer be reduced and your spousal benefits will no longer be reduced based on that pension. So basically you're going to be able to get the amount that you've earned, that you've worked towards, or half of your spouse's benefit.

[Big Al Clopine]

Yeah. So for years and Years, you could be a government employee. Right. But you worked for another company before or after working as a government employee, but you didn't get your full Social Security because the government felt like you were double dipping. Right?

[Susan Brandeis]

Yep.

[Big Al Clopine]

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.

[Susan Brandeis]

That's gone, yeah.

[Big Al Clopine]

Right. And what, and what's interesting is, so it's retroactive, so it went all the way back to 2024. And people are getting checks right now for monies that they would have gotten. But see that with this new rule. So it's. It's pretty cool. And this is true, going on a go forward basis. So. So, so nuke Luke Lelouch. The benefit of your spouse. 3570. So that's probably that. That's the benefit that she'll get at 70. That's not quite what you get. Right. You get the benefit at what, her full retirement age, which, depending upon her date of birth, is anywhere between 66 and 67. You will get half of that benefit, which is probably, what, Sue, 25, 30% lower, something like that.

[Susan Brandeis]

Yeah. So it's probably about 2,800 down there.

[Big Al Clopine]

Yeah, 2,800 ish.

[Susan Brandeis]

But you'll get half of that.

[Big Al Clopine]

Yeah. And it's a little bit better than that because it's not only the benefit that they would have got, but it's also indexed for inflation.

[Susan Brandeis]

Yeah, yeah.

[Big Al Clopine]

Right.

[Andi Last]

So does this change people's strategies? Should they consider potentially taking Social Security when they had changed their strategy because they were subject to the weapon gpo?

[Big Al Clopine]

Very possibly, Andy. Because, you know, particularly when you have a spouse involved. Because with the spouse, you can't claim a benefit until your other spouse starts claiming. Right. So your spouse has to claim a benefit for you to get the spousal benefit. So in some cases, it may make sense for your spouse to take the benefit earlier so that you can claim potentially a higher benefit. So that is absolutely true. Yeah. So it's a. It's a pretty good law. This was actually signed by the Biden administration before he left his office. And it is affecting a lot of people. I think I saw like 3 million people or something like that. This affects.

[Susan Brandeis]

Yeah, because it not only affects, you know, it's. It's both your spousal benefits and your benefits. So it's the people that are in the public sector.

[Big Al Clopine]

Yeah. So does this affect survivor benefits, too?

[Susan Brandeis]

It does, yeah. You'll also be able to get the full survivor benefits. Because before with the government offset provision, based on the calculation, a lot of people were. It was eliminated because of that. But now they're going to be able to get the full spousal benefit, survivor benefit, survive, and half this spousal benefit.

[Big Al Clopine]

Yeah. And you can imagine it's confusing. It's confusing for us. I mean, this is complicated stuff. But the point is, the two provisions that limited the amount that you got as a government employee or your spouse as a government employee have been eliminated.

[Susan Brandeis]

Eliminated.

[Big Al Clopine]

So now you get the same benefits that anyone else did, which is going to make a pretty big difference, I think, for a lot of people.

[Andi Last]

Yeah.

[Susan Brandeis]

Because in this case, you know, probably he'll get 1500 more a month with the spousal benefit than when it was wiped out. So that's, you know, that's a significant amount.

[Big Al Clopine]

It's a big deal.

[Susan Brandeis]

Yeah.

[Big Al Clopine]

All right, Andy, what else do we have?

[Andi Last]

Yeah. Okay. The next one is from Sherilyn in El Cajon here in San Diego in California. She says, hi, Joe and Big Al. We're going to change that. It says, hi, Susan and Big Al. My husband retired about 20 years ago from the city of El Cajon after 31 years of work. The city is not in the Social Security system, so he was under web. He only got around $150 per month in Social Security because of web, even though he had many quarters of work elsewhere. I am retired, but still working at the Diocese of San Diego. When I applied for Social Security at age 70, I asked the Social Security lady if my husband could get spousal benefits. Since I get around $2,000 per month, I figured he could get $1,000 or so off of my benefit. 50%. That's much better than the hundred dollars he gets now. They said no. The web law changed recently, and he got a retroactive check for $4,700. But that only goes back a couple of years. Supposedly, he will start receiving more on his benefit check starting in April. This email is obviously a little bit old, but I still have this spousal benefit question regarding him. We've been married almost 50 years. Wow, Sherilyn. 50 years. I hope you can at least answer y without us having to make an appointment to go into the Social Security office. I figure the answer is still no, but I still don't understand the reason.

[Big Al Clopine]

Well, first of all, Sherrilyn, I think, yeah, you don't want to go to the Social Security office at all costs. So we're going to try to answer it for you. So, Susan, what do you think? Does this new law, does this affect Sherrilyn as well?

[Susan Brandeis]

Yes. I mean, if she's taking your Social Security benefits that she applied at 70, then her husband would be able to get spousal benefits based on the amount that she would have gotten at full retirement age.

[Big Al Clopine]

Yeah. So what's interesting here is, so she's getting a couple thousand dollars, and so she applied at age 70. Okay, so think back to our last caller. So the spousal benefit is 50% of the benefit at full retirement age, which for Sherrilyn was somewhere between 60 and 67. I don't know exactly what. But whatever the benefit was at that point, that's what her spouse gets half of, plus indexed for inflation. So let's just, for simplicity, let's just say that was age 66. Okay. So at age 66, whatever her benefit was, then half of that benefit he would get indexed for the cost of living, which. Which Social Security announces each and every year was actually pretty high, Susan, A couple years ago.

[Susan Brandeis]

Yeah, a couple of years ago it.

[Big Al Clopine]

Was 9% or something. I think it was.

[Susan Brandeis]

It was close to that. It's gone down since, but it was close to that.

[Big Al Clopine]

It has. So I kind of. I kind of tend to figure maybe 2%. Ish, maybe a year as the. As the extra benefit. So if you're getting a couple thousand, I bet your husband ends up getting 70750 something. Something like that. So, yeah, it's. So the answer is yes. You don't have to go to a Social Security office. The answer is yes. That's why he got that check, because it was retroactive to 2024. Right.

[Andi Last]

That.

[Big Al Clopine]

So it's an extra amount he should have got for all those months that he didn't get it. So now that we're recording this a little bit later than your question, you probably already have noticed that he's getting a higher benefit, but the answer is yes.

[Andi Last]

So the way that worked was basically, they got a lump sum retroactive payment, and then it caught up to present day. And so then his payments going forward would be increased based on whatever that calculation is from that point forward after he received the retroactive benefit.

[Big Al Clopine]

That's exactly right. So if you were fortunate enough to get a check, then the Social Security administration is saying that they believe that you qualify for this higher benefit. If you didn't get a benefit or a check and you think you should have, well, that's when you got to call Social Security. Maybe you got to go to the office and just grin and bear it. You just have to do it to get your higher benefit. But I think the Social Security administration has been pretty good at figuring this stuff out.

[Susan Brandeis]

Yeah. Because they've got a lot of requests for it.

[Big Al Clopine]

They've. Yeah.

[Susan Brandeis]

Probably by now they've had a lot of practice.

[Big Al Clopine]

Yeah. So at any rate, yeah. Good news, Andy, for people that are re perceiving Social Security, that either husband or wife or both work for the government.

[Andi Last]

And so basically, if you haven't heard about this, if you weren't aware of the fact that this weapon GPO law has changed, it's definitely worth looking into whether or not that changes your Social Security situation.

[Big Al Clopine]

Yeah, without a doubt.

[Susan Brandeis]

Without a doubt.

[Big Al Clopine]

I think this. I think this will change. This will be important for a lot of people.

[Andi Last]

Yep. So the next one is actually a comment from our TV show because we have been airing some of our previous episodes of the TV show. And so the one that this person saw was actually the old episode before the weapon GPO law changed. Helen in San Diego said this morning's TV show on Social Security gave incorrect information on WEP that was eliminated in January 2025 with one of the last orders signed by Biden. We are all now getting retro lump sum paybacks from January of 2024, 14 months. And the WEP amount is being restored in our March benefit paid in April. You should correct that on the show and in the book. You are dispersing. Helen, thank you very much for the comment. We will work on that. Now we can do a new episode that has the new information in it.

[Big Al Clopine]

Well, Helen, you're absolutely right. And thanks for bringing this to our attention. So we will fix that. We have I don't know how many TV shows, Andy. We probably have a couple hundred. And we probably. Yeah, we do refunds. Refunds. We do reruns. We do refunds. We do reruns.

[Andi Last]

We will refund you on the price of watching that television show.

[Big Al Clopine]

We'll give you 28 minutes back, refund of zero. We will do that. But yeah, we. We don't record every week, probably like any other TV show. So anyway, sorry about that. We'll try to get that all fixed up.

[Andi Last]

And to actually, on the other side of that, Catherine wrote in and said, hi, 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. I thought that was a really cool message from Katherine.

[Big Al Clopine]

Wow, Katherine. Well said. I agree.

[Susan Brandeis]

Yeah.

[Big Al Clopine]

So we will continue. We'll forge ahead.

[Andi Last]

Very cool. Since we recorded this podcast episode, we have indeed updated our free Social Security Handbook to include a section on the Social Security Security Fairness act updates for 2025. Click or tap the link in the episode description to go get your copy now. Did we mention it's free courtesy of your Money, you, Wealth and Pure Financial Advisors. Oh, and cool news. YMYW was recently named among the 14 best retirement podcasts and blogs to follow by dot com and featured on nasdaq.com they ranked us as number nine overall and the number two podcast on their list. Click or tap the link in the episode description to see the other podcasts and blogs that ranked and tell a friend. Next week on ymyw, Susan Brandeis returns to spitball with Big Al on asset location in different accounts, the combat zone tax exclusion and other ways to maximize tax free retirement income, whether to invest the proceeds from the sale of a rental property and prioritizing roth Brokerage or 401k savings. If you're a late starter, look for the YMYW gang of Joe, Big Al and me to be back together on July 15th. Your money, your wealth is presented by Pure Financial Advisors. Time flies when you're planning for your entire financial future. Don't put it on hold. Schedule a free financial assessment today and see if you're on track. Our team of experienced professionals will analyze your situation, identify potential roadblocks, and create a personalized plan to get you where you want to be, including taking into account the latest changes to Social Security, your tolerance for risk, ways to reduce your taxes in retirement, and your unique needs and goals. Click or tap the free financial assessment link in the episode description or call 888-994-6257 to book your assessment, either online or in person at one of our 12 nationwide locations. Pure Financial Advisors is a registered Investment Advisor. Pure Financial are not affiliated with or endorsed by the Social Security Administration or any other government agency. Content is intended for educational purposes only. This show does not intend to provide personalized investment advice through this podcast and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision.