Podcast 114: Unfair Advantage? Breaking Down the Social Security Fairness Act

Gregory Ricks takes a close look at the Social Security Fairness Act and what its recent passage means for both government employees and the future of Social Security itself. Using real-world examples, he breaks down why repealing the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) could lead to unintended — and unfair — financial consequences for American taxpayers. Gregory also shares insights from Harvard Business School's Arthur Brooks about two common financial mistakes that can derail your financial goals: normalizing debt and confusing spending with happiness. Whether you're preparing for retirement or just trying to stay on track with your money in 2025, this episode will give you important updates, critical advice, and steps to protect your future. 

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Transcript

00:00 Hey, welcome. I'm your host, Gregory Ricks, a financial advisor here to answer your questions and help you win with your money. Hey, y'all, welcome back. On the screen there on Facebook Live and YouTube channel, streaming, holding up my book. Excited about that. Predict it, record, record sales, record requests for this book in 2025. Retirement Deserves a Helpful Hand: A Guide to the Destination You Deserve. A little bit about me and the book, my back story, but more about you is what the book's about, on getting on the right financial path to reach that destination you deserve.

You want a copy of the book? I make it happen for you. Reach out to my office: info@gregoryricks.com. You can email us, go to the website, request it, call the office, 504-832-9200. If you want it to be signed, ask for it, and that will happen for you. If you have a friend or someone you think we should send a copy of the book to, let us know. We want to help them. We want to get the message out there and change financial life. So help me with that. Thank you.

1:42 I'm your host, Gregory Ricks. This is Winning at Life, and we'll be done with this show at about one o'clock today. This segment and two more. The Social Security Fairness Act should be signed into law Monday, and it's a $200 billion boondoggle. I've got Tom Margenau's article here from Epoch Times I'm covering with you. Congress just passed a law that would give millions of people extra Social Security benefits that they simply do not deserve and have not earned.

It's in the article. Reading it from one of the foremost authorities on Social Security, Tom Margenau, to understand what's going on. Here's a quick history lesson. The original Social Security Act included unintentional and overly generous benefits for government employees. These were benefits that no other American could get. About 50 years ago, a more responsible Congress recognized this and created two laws to correct this mistake: the Windfall Elimination Provision and the Government Pension Offset.

Once again, let me back up — two laws to correct the mistake. The Windfall Elimination Provision said that Social Security retirement benefits for government employees should be figured in the same way as those for all other senior citizens. The Government Pension Offset law said that government pensions should offset any Social Security spousal benefits potentially due, just as Social Security retirement benefits have always offset for those same spousal benefits.

But now, bowing to relentless pressure from government employee unions and advocacy groups, a more naive and vote-seeking Congress has repealed the WEP and the GPO. So once again, government retirees like Tom will get overly generous Social Security benefits that no other senior citizens in the country are eligible for, and by so doing, they have put a $200 billion hole in an already rapidly deflating Social Security budget balloon.

He goes on to explain why repealing the WEP and GPO is a wrong-headed boondoggle, and he's going to use himself as an example. But first, you need to know a basic tenet of Social Security: benefits have always been skewed to give lower-paid workers a better deal than their more highly paid counterparts. Very low-paid workers could get a Social Security benefit that represents up to 90% of their pre-retirement earnings. This percentage is known as a replacement rate. People with average incomes, the middle class, generally get a 40% replacement rate.

So back to Tom. He spent the bulk of his career working for the federal government. While working as a Fed, he paid into the Civil Service Retirement System, not Social Security. Things have changed since he was hired in the '70s. All federal employees hired after 1984 pay into Social Security.

He also did pay into Social Security at a few jobs he had in high school and college and at other jobs, and since he retired from the federal government, work as well. He's had about 15 years of earnings that were covered by Social Security. So when the Social Security computers looked at his work record, when he applied for Social Security benefits, they assumed that he must be poor. After all, he had all those years with no earnings. That record didn't show that he actually was working all that time for the government and earning a Civil Service Retirement Pension.

Do you understand? He showed up poor because he was working elsewhere in a different system for a pension. He wasn't paying Social Security taxes on his payroll either. And because the Social Security system thought he was poor, it was programmed to give him that 90% poor person's benefit rate. In other words, he would have been getting an undeserved windfall from Social Security.

And that's where the Windfall Elimination Act comes in. It correctly recognized that he wasn't poor, and it gave him the same 40% rate that all other average-income Americans get. And it did the same for all other workers who spent the bulk of their careers in jobs not covered by Social Security. These are primarily teachers, police officers, firefighters in certain states. Why those groups don't pay into Social Security is a subject for another time.

For the past half-century, union officials representing these groups have been pressuring Congress to eliminate the WEP because they wrongly think that the law cheats their members out of Social Security benefits they are due. And in each of those years, a bill to eliminate WEP has failed to get approved.

But hey, he notes here, this is a wacky political year. Things are different. So even though almost all of you reading this column are getting the proper 40% Social Security benefit rate, Congress now has decided to eliminate the WEP to give Tom and all those other government employees like him the 90% rate, boosting their Social Security checks by a couple of hundred bucks per month.

He notes this as what a shame and what a sham. But it gets even worse, as he said. The other law that was misnamed Fairness Act eliminated what is called the Government Pension Offset.

To explain what's going on here, he will once again use himself as an example. Before the GPO law came into effect, he would have been able to get a government pension retirement check, and he would have been due a dependent husband's benefit on his wife's Social Security record. Why? Because of those poor Social Security computers, those Social Security computers think he's a poor old guy with just a small Social Security check, so he was deemed financially dependent on his wife and granted spousal benefits on her Social Security record.

But the GPO law came along and recognized that he worked for the government and he got a civil service pension check. And just like a Social Security retirement check offsets any spousal benefits that might be due, his civil service pension check would also offset those potential dependent benefits.

By eliminating the GPO, Congress has given him — giving him and all those millions of other government pensioners — unintended benefits from their spouses. Think about that. Almost all of you listening and, of course, reading his column cannot collect your own Social Security retirement check and at the same time get some extra benefit from your spouse's account. But now he and other government pensioners will do just that.

We'll clean that up when we come back from the break. Yeah, it's concerning what's happening. You're listening to Winning at Life with Gregory Ricks on iHeart Radio. We'll be right back.

I'd like to hear your feedback, your thoughts on this story in the Epoch Times about the Social Security Fairness Act. Email me: info@gregoryricks.com — your thoughts.

I'm back up to the last two paragraphs and run this again, just so we get what's going on. By eliminating the GPO, Congress has given Tom and millions of other government pensioners unintended benefits from their spouses. Think about that. Almost all of you listening and reading this column cannot collect your own Social Security retirement check and at the same time get some extra benefits from your spouse's account, but now Tom and other government pensioners will do just that.

Put it a little bit differently: that would be the equivalent of — think of a couple that's listening to the show, or your parents that are in retirement drawing Social Security. They each receive either a Social Security check based on their working years and a correlated benefit to that, and the spouse is receiving benefits off their work record. In some cases, one of them doesn't have enough work credits, so they're receiving benefits based on the worker's record — the spouse is.

But this is an example of what's going on with government workers: that if that spouse died, the worker would continue to get those benefits under this scenario that the government employees are going to be getting. But we know that's not the case, because you can't draw your own Social Security benefits and your deceased spouse's benefits, or the spouse's benefits from that. It's one. You know, we pretty much know this as a certainty. If one of you passes away and you're both drawing Social Security benefits, the smallest check of the couple is essentially going away.

So Fred's drawing $1,500 a month, and Ethel's drawing $1,000 a month. Either one of them dies, the $1,500 keeps coming, the $1,000 check goes away. The larger check sticks to the surviving spouse. But now government employees get both. That's just — that's just part two of this whole boondoggle here.

So if you believe that repealing the Windfall Elimination Provision and Government Pension Offset makes sense, write to your member of Congress and tell them (or her) that you think the Social Security Fairness Act was a great idea. But if you don't think it's fair, then you need to write to your member of Congress and say, "Shame on you. Thought you were supposed to be saving Social Security, not squandering its funds on greedy government retirees."

That's the last line of his article. And I — I understand. I've covered Social Security; it's one of our main jams on Winning at Life, and we do educational events every year for this. I understand how this works thoroughly. I'm shocked that it passed. I'm going to be shocked if it's signed. I also will not be surprised if Congress passes a bill that repeals the Social Security Fairness Act down the line. I will not be surprised by that, because this is wrong.

It ain't the first time they went and passed something that they didn't understand. You remember — you've heard this before — I won't name names, but it says you got to pass the bill to read it. You know? What the heck are they doing up there in Washington? I don't know who they're looking out for, but sometimes it doesn't seem to be us, does it?

Well, if they don't do it for government employees — well, if they do it for everybody, you know, if the spouse dies, you keep getting the spousal benefit, the survivor benefit from that. You get two checks, even though one's died. But no, just only if you're a government employee. That's the rules. That's what it is.

Write to your Congressman. So you understand: government employees, teachers that are getting the benefit. I know so many of you have called me over the years. Don't hate on me for the truth. I'm just telling you the truth, and I wanted to share it.

From Tom's standpoint — he is a 32-year government employee and employee of Social Security — wrote the article. So there you go. It's not — it's saying, "Gregory, you're biased, and you know, you're just hating on government employees and teachers." No, it's how the system's supposed to work, and I just wanted to share it with you that way. Sometimes things like that happen.

So let's take a look here. See what else I got on my mind here today. I got lots of stuff. Course, always like that. I've got a piece here. Let's see what I can come up with you for.

Harvard professor reveals two big errors when it comes to money in America — warns you're in big trouble when you combine them and wind up calling Dave Ramsey. Are you making them? Arthur Brooks, professor at Harvard Business School, is one of few experts who has been focused on his teachings on the link between wealth and well-being.

He recently had appeared on George Campbell's popular YouTube channel to discuss two major financial pitfalls Americans fall into, according to his research: normalizing debt and thinking about buying stuff and how somehow it can lead to happiness.

He said these are two big errors, and when you combine those errors, you're in trouble. Normalizing debt, according to Professor Brooks — assuming that borrowing is somewhat okay — is one of the biggest mistakes Americans make.

The normalization of debt is evident in recent data. In the second quarter of 2024, household debt ticked up to $17.8 trillion, according to the Federal Reserve, and $12.5 trillion of that aggregate balance is mortgage debt, which Brooks admits is the only form of debt that doesn't lower life satisfaction.

Despite this, many consumers go into debt for both big and small purchases. Over 80% of U.S. vehicle purchases in the second quarter of 2024 involved some form of financing, according to Experian. Meanwhile, 82% of Americans have at least one credit card, and 40% of them rely on credit cards to meet their basic needs.

I'll talk to you more about this next Saturday on Winning at Life. Come back and join me for three great hours. If you need help during the week, reach out to us at gregoryricks.com. Y'all have a blessed week. Start on your goals. Have great success in 2025. Bless you all.

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