Transcript

Introduction:

Tina Mistry:

• Good afternoon, everyone. We’re going to go ahead and get started, even though some people are still entering the webinar. We want to be mindful of everyone’s time today.
• My name is Tina Mistry, CEO and Senior Financial Advisor at Portfolio Advisors. Welcome to our webinar on Social Security: Demystifying Myths and Recent Changes.
• This webinar is inspired by recent news about Social Security and its impact, particularly on pensioners in California. We’re looking forward to sharing information with you and helping educate our audience.
• I’m pleased to introduce my colleague, AJ Flores, Lead Financial Advisor at Portfolio Advisors. AJ has been with the firm for about 10 years, starting as an intern, and has developed expertise in Social Security.

AJ’s Introduction

AJ Flores:

• Thank you, Tina, for the kind introduction.
• We will stick to an hour, but feel free to put any questions in the chat, and Tina will be monitoring them. If we don’t get to a question right away, we’ll address it later or after the webinar.
• Let’s get started.

Tina Mistry:

• This is our quarterly webinar, and we aim to do these at least every three months. The session is being recorded, so you’ll receive the recording and slides afterward.

Myths and Misconceptions about Social Security

AJ Flores:

• Today, we’ll address some common myths about Social Security and recent changes to the system, particularly the repeal of the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP).

Myth #1: Social Security Will Run Out of Money Soon

• Social Security isn’t going away soon. It’s funded through payroll taxes from today’s workers and interest from U.S. Treasury securities in the trust fund.
• While the Social Security Trust Fund may run out of money by 2034, this doesn’t mean Social Security will disappear. Payroll taxes will still cover about 77-80% of benefits.
• Social Security was never meant to be the only pillar of retirement; it should be part of a broader strategy, including boosting personal savings and investing in tax-advantaged accounts.

Myth #2: Claiming Benefits Early Is Always a Bad Idea

• Claiming benefits early reduces monthly payments, but it may make sense depending on your personal situation.
• If you have a shorter life expectancy due to health reasons, or if you need the income, claiming early can be beneficial.
• On the other hand, delaying benefits increases your monthly payment by 8% per year until age 70, so if you expect to live longer, waiting might be a good choice.

Myth #3: If You Work While Collecting Benefits, You Lose Them

• This myth is incorrect. If you’re under full retirement age and earn income while collecting Social Security, your benefits may be temporarily reduced, but they are not permanently lost.
• Once you reach full retirement age, you can earn as much as you want without affecting your benefits.

Myth #4: Benefits Are Based Only on the Last Few Years of Employment

• Social Security benefits are based on the highest 35 years of earnings. If you’ve worked less than 35 years, the remaining years will count as zeros, reducing your benefits.
• For those considering retirement, it may be beneficial to work a few more years to replace any zero years in the calculation and increase your monthly benefit.

Recent Changes to Social Security: GPO and WEP Repeal

AJ Flores:

• The GPO and WEP provisions have historically affected public employees who didn’t pay into Social Security but earned pensions. Recent legislation has repealed these provisions, which may benefit many public sector workers.

Government Pension Offset (GPO)

• GPO reduces benefits for certain public employees who did not pay into Social Security but file for spousal or survivor benefits.
• With the repeal, spouses who were affected by this provision can now receive their full spousal benefit.

Windfall Elimination Provision (WEP)

• WEP affects people who worked in jobs where they earned a pension but did not pay into Social Security.
• With the repeal, individuals who previously had their benefits reduced due to WEP will now receive their full Social Security benefit, as long as they meet the 30 years of substantial earnings in Social Security.

Case Studies

Case Study 1: Married Couple, One in Public Service

• John, who spent his career in public service without paying into Social Security, and his wife Mary, who qualifies for Social Security, now see a significant increase in their household income due to the GPO repeal.
• John can now claim his full spousal benefit of $1,100 per month, adding $13,200 annually.

Case Study 2: Retired Public Servant with Own Social Security Record

• Sophia, a retired public employee, had her Social Security benefit reduced due to WEP. With the repeal, she will now receive her full $1,500 benefit, an additional $6,700 per year.

Case Study 3: Widowed Educational Employee

• Linda, a teacher who never paid into Social Security, would have seen her survivor benefit eliminated under the old GPO rules. With the repeal, she can now receive her full survivor benefit of $2,200 per month.

Case Study 4: Dual Income Couple (One in Public Sector)

• Robert, a police officer with a $4,500 pension, and Emma, a software engineer with a $2,400 Social Security benefit, see an increase in household income due to the repeal of both the GPO and WEP provisions. Robert can now claim a $1,200 monthly spousal benefit.

Next Steps for Social Security Filings

AJ Flores:

• If you have an active filing affected by the GPO or WEP, ensure your information is up to date on Social Security’s website.
• If you haven’t filed yet, consider doing so as soon as possible to ensure you receive any retroactive payments. Social Security will implement retroactive payments through the entire year of 2024.

Q&A Session

Tina Mistry:

• We’ve received a couple of questions regarding survivor benefits and spousal benefits. For survivor benefits, the retirement age is based on the survivor’s age at filing, and the deceased spouse’s benefit will determine the amount.
• We also had a question about spousal benefits. Filing early for a spousal benefit can reduce the amount, and there’s a more complex calculation for how much the reduction will be, but it’s typically similar to the early filing reduction for personal benefits.

Closing Remarks

Tina Mistry:

• Thank you for joining today’s session. Please reach out if you have more questions or need help navigating Social Security decisions. We’re here to assist.

AJ Flores:

• Our next webinar will be on March 25, and Tina will be presenting on Tax Tips. Stay tuned for more details, and feel free to follow us on social media for updates.

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