Transcript 

Ben Smith:

Welcome everybody to the Retirement Success in Maine Podcast. My name is Ben Smith. I am joined by always my two cohosts here, Abby Doody and Curtis Worcester, the Margaret Chase Smith and George Mitchell to my William S. Cohen. How are you guys doing today?

Curtis Worcester:

Doing well.

Abigail Doody:

Good. How are you?

Ben Smith:

Doing well. Of course, we're kind of keep rolling with the shows here. Things are going great. Again, we want to say think you to a lot of listeners out there. We are at episode 40 and I know we're getting a lot of momentum. So I want to just make a quick plug here. If you have been listening for a while and if you want to leave us a review, feel free to go to Apple Podcasts and at the bottom of our show list you can go and click and rate us, review us. We'd love to just hear feedback that way so feel free to go in and we'd love to have some of the feedback there in the review system for Apple Podcasts. But really for today's show one of the things we wanted to dig into was, hey, retirement of course is a really big deal but one of the foundational components of retirement really kind of is this idea of what's the level of income I'm going to have over the course of my retirement? And it's really estimated for the average American retiree, 40% of their retirement income comes from Social Security. But how do I make sure that I'm making good decisions about a Social Security benefit that's supposed to pay me for the rest of my life?

Ben Smith:

Am I asking the right questions of Social Security when I talk to them? Are there benefits that I might be entitled to that I don't know about? What about life complications that can impact my Social Security benefits like divorce, disability, and death? So of course with all of our shows we want to discuss the insights that may better your upcoming or existing retirement. So that's really the premise of today's show. We wanted to have that conversation about Social Security. So really enter someone here that helps educate the public on how to maximize their Social Security benefits. So our guest today, she is the Social Security Administration's public affairs specialist for all district offices in the state of Maine as well as for the Portsmouth, New Hampshire district office. She's been working for the agency since 2005 and enjoys sharing her knowledge of Social Security with the community she serves.

Ben Smith:

And I do have a quick disclaimer I need to read here. That participation in this podcast, presentation and video does not constitute an endorsement by the Social Security Administration or its employees of the organization and information and products not provided by Social Security. So Social Security does not endorse this podcast, nor us at Guidance Point Advisors. Want to make sure that's really clear. But we're really thrilled to have our guest on today's show. So I'd love to welcome Libby Newport to the Retirement Success in Maine Podcast. Welcome Libby.

Elizabeth Newport:

Hi. Good morning. Thank you very much for having me. It's a pleasure to be here.

Ben Smith:

Well, thanks for coming on. And one of the things again, we have a lot to unpack in today's show and I know we're going to be hitting you and peppering you with lots of different scenarios and questions that we see from our clients' perspective almost on a daily basis. But with all of our guests we always like to dig into our guests and hear a little bit about you. Because I know Libby in our conversations you just have such a great passion for helping people. And really just is apparent with every conversation I have been a part of and heard the interactions that you've had here. But I'd like to just get into your history. So can you just tell us a little bit about your experience growing up and your connection to Maine?

Elizabeth Newport:

Yeah. Sure. I was born and raised in southern Maine and I stayed in Maine for college and then I decided to make my home in Maine after that because most of my friends and family, they are still here and so that's home to me is my friends and family and Maine. It's my home.

Ben Smith:

Nice. And I think that's something where ... And especially all three of us are also Mainers here and just the passion, connection you have. Until you've kind of been here and being able to experience the ocean, but being able to experience the mountains or you've got a little city in the southern part of the state or you can go really rural and really agricultural in lots of different pockets. You kind of have all these really flavors here which really makes Maine really special. But I'd love to hear a little bit more about your path, Libby, towards working for the Social Security Administration. So how did that come about? What was the passion there and what was the thing that drove you to that career?

Elizabeth Newport:

Sure. Sure. So a couple of years out of college I was looking for a different job. I was even contemplating perhaps returning to school, going to graduate school, law school. But I was really lucky to be looking around at around the time that the Medicare Modernization Act was signed into law. And so because the Social Security Administration was going to be so instrumental in that program, they were looking to hire some new people to come on board. And so I was fortunate enough to be one of those people and I've been with the agency since 2005. So yeah, it's been great.

Ben Smith:

So have you been in your role in terms of the public affairs specialist? Has that been your role the entire time? How has it changed for you since you joined in 2005?

Elizabeth Newport:

Yeah. That's great. I joined as a claims specialist and so for the first nine years of my career at Social Security I took claims from people filing for retirement, disability, survivors benefits. And so one thing I quickly learned working for Social Security was that I really had to figure out how to make complicated things easy to understand. Depending on who I was talking to, I really had to tailor my communication style. If it was someone who was in their 20s who was no longer able to work because of a disabling condition or if it was an older person who'd just lost their spouse and they were looking into survivors benefits. So I was actually able to utilize that skill and do small presentations around the community in the field office that I worked in. And then in 2014 an opportunity presented itself so that I could continue to do more of that work but throughout northern New England. So I've been in public affairs since 2014 and I think my most favorite thing is when I've explained something to someone and they tell me that I explained it in a way that made it so much easier for them to understand because Social Security by nature can be complicated and so it's always my goal to be able to relate information that might be very difficult for some people to understand but explain it in lay terms.

Ben Smith:

You kind of took my next question, was what do you love about your job? Which is really great. But I want to say that what's really interesting about what you just said was ... And it just kind of came to me this way was, obviously when you're talking to people as the claims specialist at that point, a lot of times it's at your most fragile or at your most sensitive points in your lives. Hey, maybe I just became disabled and now my whole world is changing and I'm trying to figure out what this new world looks like. Or I'm going to retire. I've worked my whole life and now I'm changing to not working or working less and I'm claiming social ... There's a lot of worry nerves there. Or I lost my spouse. All those times. These are very heightened, very emotional times for people and of course having somebody there to go not only, I know how to help you but I also can sympathize with your situation and help you get through that too is really important. So I can see where that was really a good match for you, Libby, there in terms of your personality to what you're achieving there.

Ben Smith:

But I really want to dig into a lot of Social Security things here because there's so much really to unpack. So if you're listening to this show we're going to pepper Libby here with lots of different questions because I know everybody has tons of questions. And not only just if you have gone through the claiming process already. If you're already in retirement there's other things in the future that you might need to be interacting with Social Security about. So I want to ask about the whole spectrum of experiences here. So I'd love to just start with this question. I really want to dig into the experience of claiming Social Security. Because I think that's one thing if they've never really interacted with the Social Security office before, what do I do? Where do I go? So that's the first question is, when should someone reach out to the Social Security Administration to discuss claiming their retirement Social Security benefits?

Elizabeth Newport:

Sure. That's a great question. The earliest point at which someone can claim their benefit is three months ahead of the date that they want their benefits to begin. That's the earliest point at which our computers can handle such a transaction. It doesn't mean that you have to do it three months ahead of the time. Some people might decide to retire maybe a month before. But anytime in that three month period before the date that they want their benefits to begin is sufficient.

Ben Smith:

Nice. So now we know when. So here's the how. So I want to go schedule an appointment with someone at Social Security Administration. How do I go about scheduling an appointment?

Elizabeth Newport:

Sure. We have nine district offices that serve the state of Maine. And so you can call your local office to schedule an appointment to speak with someone ahead of time. So if you call in the end of March and we can't see you until April sometime, we would still consider March to be your filing date if that what you wish. But we do protect that original point of contact. And so you can just call ahead and schedule an appointment and we'd be happy to call you back and we can do most everything over the telephone.

Ben Smith:

Okay. Because that was going to be another question here is, how many times do you sit down with people and they go, "I'm going to go visit Social Security? I'm going to go there and ..." That was really ... The question was ... Because we hear so many people say, "Hey, I'm going to have a meeting with a person at my local office." And as you said there's nine offices across the state here, which is great. Which means there's at least an office generally locally enough available to most people in the state. So in terms of obviously we're recording during pandemic times here and hearing from ... I guess the perception is that most people were saying I want to go visit in person and sit down. So how can people conduct meetings? You mentioned telephone but is there other ways that people can connect with you and have those sessions?

Elizabeth Newport:

Sure. We do offer online appointments. So for the person who's comfortable filing an application online they can absolutely utilize our online services to do that. Some people might be a little bit nervous about doing that but rest assured that every single application that is submitted online is reviewed by a claims specialist. They look at everything, make sure that they address any questions or discrepancies. They'll contact you to make sure that the claim is processed smoothly. For those people that still want to talk to somebody, at this point in time because our offices are closed to foot traffic, the only option to communicate with us would be over the telephone. But when we're not in a pandemic we do see people face to face.

Elizabeth Newport:

But even prior to a pandemic, telephone appointments was a very popular option because geographically we were talking about Maine earlier about how big and vast it is. So the city of Calais for example, they're part of the Bangor district but to go into the Bangor office from Calais would require a four hour round trip for something that can very likely be done over the telephone. So we absolutely are happy to see people in our offices when our doors are open physically but we certainly encourage people to utilize the phone option as well. It's something that we've done before COVID and I suspect it's something that we'll continue to do even once we are reopened to the public physically.

Ben Smith:

Got you. Okay. And again also from a phone option, might also be more convenient for more parties. Sometimes there might be, "Hey, I'm not really the financial person and sometimes numbers are not my thing so maybe I need a spouse or maybe I need another advocate here to come and help me." So it's helpful too. But I think from a phone perspective is maybe on speaker phone, listen to it together and have those conversations where maybe multiple people are listening to what's being said and interpreting that. I want to ask about when do Social Security payments start? So say for example I turn 62 in April and I want to claim. Do payments really start the month in which I turn 62 or do they start in the year I turn 62? I guess that was a question in which we get a lot.

Elizabeth Newport:

Okay. So yeah. So the payments begin as of the first month you are 62 the entire month. So if your birthday is in April, you wouldn't be eligible for payment until May because you have to be 62 that entire month. And then our benefits are always paid the following month. So your first month of entitlement would be May and it would be paid in the month of June. So that's when you'd be able to expect your first payment.

Ben Smith:

Got you. Okay. I think that's really important. And I know we used the example of 62. Just because that was of course the first year which you could file. Again, the next questions here is, we hear of course every year I wait to claim Social Security I can earn an increased benefit. So does that increased benefit actually increase upon my birthday or by the year again? So again, if I turn ... Let's use this same example. I turn 62 in April. If I waited till I turned 63 and the same kind of concept is when does the actual increase get applied I guess is the question?

Elizabeth Newport:

Sure. No. That's a good question. So you actually don't have to wait until the month of your birthday to claim your benefits. So if you decide as of April the month that you turn 62, if you think, oh, I missed it, I don't want to do it at age 62, I'll wait a little bit. You don't have to wait until the following April when you reach 63. You could do it any month after that point in time. Your benefit increase actually takes place for every month that you get closer to your full retirement age benefit. So at age 62 ... So we'll use 66 as a full retirement age for all intents and purposes. For someone whose full retirement age is 66 years old, they can get 100% of their benefit at that point in time. If they decide to take it at 62 they're going to get a 25% reduction. If they wait until age 63, it'll be about a 20% reduction. But for every month in between that it does go up just a little bit.

Ben Smith:

Got you. Because that's important to know because I think there's a little bit of fear about hey, I got to wait to a certain period and what if I waited 11 months into it and I claimed maybe one month too early and then I would have missed out on [inaudible 00:14:55] and maybe shot myself in the foot. That's a really good thing I wanted to clear up as a little misconception we've heard from our clients too. Yeah. I think that's something where we wanted to make sure it was cleared up.

Abigail Doody:

So another thing that we see pretty often is where one spouse is the primary wager earner throughout their lifetime. And so how do spousal benefits work? This is a very common question we get a lot. And so what are some of the popular claiming strategies with spousal benefit too?

Elizabeth Newport:

Sure. Yeah. So spouse benefits are made available to a member of a married couple who either has not had the opportunity to work outside the home a lot or just did something else. Took care of children is a lot of the time what we see. And so anytime someone files a claim for Social Security benefits we always ask about current and previous marriages or divorces because we want to make sure we're not missing any entitlement. And so a spouse is eligible for a benefit from their higher wage earning spouse as long as their own full retirement age benefit is less than half of that of their higher wage earning spouse. And so when I speak to people I like to give a couple of examples because it's easier to understand. So in the case that my full retirement age benefit is $1,000 and I'm married to somebody whose own full retirement age benefit is $300, what would happen is, when my spouse files an application they would first get that $300 on their own plus 200 additional dollars to get that half maximum. Because it does have to be a combined benefit. You take what you can get from your own first and then get that 200 additional to get the $500 half of mine. It does not take away anything from me as the worker. It's above and beyond what we pay into Social Security.

Elizabeth Newport:

In another scenario if my full retirement age benefit is $1,000 and I'm married to somebody whose own full retirement age benefit is $800, they would not be eligible for a spouse's benefit at all only because their own benefit exceeds half of mine.

Abigail Doody:

Okay. That's great.

Ben Smith:

Libby, I'd like to ask just a followup to that. So spousal benefit, they used that example of 1,000 and 500 right? So if say the spouse has got a $300 benefit on their own, can they claim a spousal benefit if that spouse that's going to earn $1,000 a month if they haven't claimed yet? Do they have to have claimed first I guess is the question?

Elizabeth Newport:

Yeah. No. That's a great distinction. So yes. In order to qualify for a spouse's benefit that worker would have had to have established a payment on their own record in order to qualify for a currently married spouse. Yes.

Ben Smith:

Because that's obviously ... In terms of there's complications there when you have spouses of different ages right? If maybe the higher earning spouse or maybe the spouse that has a higher projected Social Security benefit is younger then what you might have is the spouse with the lower Social Security benefit might have to wait longer for that higher spousal benefit to come to them essentially for them to be able to claim it, right?

Elizabeth Newport:

Mm-hmm (affirmative).

Ben Smith:

So that's that trade off of ... Could they claim on their own I guess and then claim again based on their spousal benefit when they become eligible?

Elizabeth Newport:

They can, yeah. So if they are eligible for something on their own they could qualify on their own. If they decide to take it early, it is going to be a reduced benefit. And then once the higher earning spouse files their claim we would then follow up with the application for that spouse to take the benefit as well. It will be reduced because they initially decided to take a reduced benefit so the maximum you can get is half of the higher wage earning spouse's full retirement age benefit. But otherwise yeah, they can absolutely take it beforehand.

Ben Smith:

Love it.

Curtis Worcester:

I want to keep going on this idea with the spousal benefit. A situation we see and talk a lot about is someone who's remarried. And they're interested in their current spouse being eligible to receive their Social Security benefit. But they're also ... How does that apply with the ex spouse as well? And then are there certain conditions that distinguish which spouse would get it? I think a specific example we're thinking about, we actually met with an individual who had been married five times and there was a lot of concern in that conversation of who of his spouses or ex spouses was going to be eligible or what conditions had to be met. So if you could just kind of talk about that a little bit that would be great.

Elizabeth Newport:

Sure, yeah. So yeah, Social Security does pay divorced spouse benefit. A couple of things have to be true for that to take place. One, there is a duration of marriage requirement. So in order for a divorced spouse to collect a benefit from a former spouse they need to have at least been married for 10 years. So in the case that the person you were speaking with had one of the ex spouses, they were only married three years, they wouldn't be entitled to a benefit at all so that would make it to four. And then the other thing is that the spouse has to remain unmarried in order to collect. So the divorced spouse I'm saying. So the lower wage earning spouse who's qualifying for the higher wage earner spouse, they would have to remain unmarried. So if that person later remarries they would not qualify for a benefit from that first higher wage earning spouse. I think I said that right.

Curtis Worcester:

No. That makes sense.

Ben Smith:

I know we went really complicated there.

Elizabeth Newport:

But for divorced spouses, yes. As a general rule, yes, divorced spouses can qualify for a benefit. Of course every situation is unique. There's a maximum of family benefits payable on every record. It's generally about 150 to 180% of the worker's full retirement age benefit. And it's kind of like pieces of a pie. So you've got to pay the wage earner but then there's some left over to pay any of the additional family members that would qualify and so obviously the more people that you have the less amount there's going to be paid to those people.

Ben Smith:

So question there Libby is ... Okay. I just want to go in a scenario just kind of ... Because I want to kind of give a little real life example to what you're saying. Okay. So say this person ... Let's use the example of this person got married five times and one of them was for only three years. So there's four people there potentially. Say each of them were married for 10 years each to this person. So they all would possibly have a claim to a spousal benefit if they did not get remarried themselves.

Elizabeth Newport:

Correct. That's absolutely correct. The possibility of that, yes.

Ben Smith:

So is there a first to file thing here because as you said there's a pie of say 180% of benefit available and maybe one of the earlier marriages is older than the others so they maybe become eligible first. They claim spousal benefits earlier than others. Would that diminish the benefits for the other three or for other ones eventually that come down the road and later claim?

Elizabeth Newport:

Right. They would always have to adjust for however many people are on the record and so if one person decides to take a benefit and then another former spouse comes on board to take the benefit. We would then have to just adjust as necessary. So if there's not enough to pay for the same amount of money then adjustments have to be made. And so we would then just notify the first person. Like somebody else filed an application. Your benefit's now going to be reduced to X amount of dollars and duh, duh, duh, duh, duh.

Ben Smith:

Got you.

Elizabeth Newport:

We're not allowed to reveal contact information or anything like that. Not even to the worker, the number holder. They're allowed to know that somebody's claiming a benefit on their record but we're not allowed to provide personally identifiable information to the worker just to protect privacy.

Ben Smith:

Just know that that's a really weird example we gave. But I just wanted to just kind of go through that real quick.

Curtis Worcester:

I just want to stay on it now at this point because we're in deep with this one. So say in this example would that affect ... The idea of having to adjust the spousal benefits for various ex spouses. How does that affect his current spouse? Like with his current spouse is there any sort of ... I don't know if priority is the right word there.

Elizabeth Newport:

Not necessarily because Social Security can't really tell anybody when to file their application. If a former spouse comes on because they're eligible for a benefit and current spouse is either still working or not interested in filing an application for a benefit we can't really do anything about that.

Curtis Worcester:

Okay. That was-

Ben Smith:

I know that was a rabbit hole we went down.

Elizabeth Newport:

The thing is, when it comes to spouses and ex spouses, there's really no one size fits all. Each situation is going to be very unique depending on the age of the person or the people filing. Whether or not they had the number of years duration of marriage. We have to prove the marriage with a marriage certificate and the divorce decree. So there's a lot that goes into processing one of those claims. I've done it. We've all had to do it but there's a lot to it and they're all unique.

Ben Smith:

Yeah. I think from our end, Libby, I think what we've heard, now that you have explained it, it obviously is a misconception, is that look my current spouse better file because we don't want the ex spouse to get the money of the spousal benefit. They think it's binary of that only one of them can get a spousal benefit so let's just hurry up and get this done as quickly as possible so the other person doesn't get that benefit because of course we don't like them anymore. So there's some of that stuff going on and you explaining that I think helps this a lot of hey, there's a lot of scenarios which would still entitle you to benefits. There's obviously things you can't control like your age and when you're eligible that wouldn't preclude you from still getting a benefit.

Elizabeth Newport:

Correct. Yeah. And it's not a race. And it really is dependent on how many people are filing an application on that one record. The more people that you have you can still get a benefit. It might not be as much as what you would like to get but we have to pay it equally that way.

Ben Smith:

So Libby, I want to talk about again, so you're talking about filing on a person's record and I think what a lot of people maybe don't know about is that Social Security can also benefit children as well. And so can you tell us about what scenarios would lead a child to receive Social Security benefits?

Elizabeth Newport:

Sure. Yeah. So a child could qualify for a Social Security benefit from a parent if the parent is receiving a retirement benefit or a disability benefit or if their parent has deceased. So if that child is minor they can qualify for up to 50% of the living parent's benefit and up to 75% of a deceased parent's benefit. And so it's similar to the marriage question. There's a maximum of family benefits that are payable. So in the case that I am getting a $1,000 benefit for my own full retirement age benefit and I've got two kids and I've got $500 payable because the most that they can get is 50%. If I have two kids, each of the two children would receive $250 per month and then what would happen is when my older child turns 18 years old my younger child would then get the full $500 until they reach the age of 18 years old.

Ben Smith:

Got it. So I guess the question is, so is the age of 18 kind of that magic number for when they would stop receiving benefits? Is there anything else that would kind of come into that equation for when they could stop receiving?

Elizabeth Newport:

Sure. Yeah. So you get a notice telling you that your benefits are going to stop at 18 unless you're a full-time high school student. And so then we can extend payments called student benefits. Another scenario is if the 18 year old individual is disabled. They can file an application for what's called childhood disability benefits on the record of that parent. And so what we would do then is we would take an application to see if they meet the rules for Social Security disability and if they are found to be disabled between the ages of 18 and 22 they can receive that benefit from their parents indefinitely. Doesn't mean that the benefits are going to stop at age 22, it just means that they have to be found disabled during that prescribed period of time. But they could also qualify for that benefit beyond age 18 if they meet the disability requirements.

Abigail Doody:

So this is another one that we hear a lot is how the Maine employee retirement system or MainePERS and Social Security interact. And so can you ... I'm sure you guys get this question all the time. So can you go over how the two systems work together? If somebody works as a teacher for sometime and pays into that system and then they go into the private sector and pay into Social Security, do they offset each other or kind of how does that work?

Elizabeth Newport:

Your Social Security benefits are calculated by quarters of coverage. And so that's basically the increment of how much you pay in Social Security taxes. And you can earn four of those per year. And as long as somebody has earned 40 in their lifetime or 10 years of work, they will qualify for a benefit. And that does include teachers and people that have paid into Maine public employees retirement system. They might not get as much as they thought they were going to get because of when windfall elimination provision which I'll explain in a moment, but they will qualify for a benefit. So that's one misconception is that you don't qualify for any Social Security if you got that Maine public employees retirement pension. But the way that it works is that a lot of the Maine public employees retirement folks, like you said before, they've either worked in private employment and paid Social Security taxes before their state employment, after, even sometimes concurrently we'll see teacher that have worked in summer jobs. And so the more that they've worked and they paid into Social Security the higher their benefit is likely to be.

Elizabeth Newport:

What happens is that people whose primary job is not covered by Social Security and by a different system entirely, Social Security system doesn't have the capability to recognize that they're paying into a different system entirely. And so the way that the Social Security payments computation is structured is that someone who's been a higher wage earning throughout their lifetime, they're going to get a lower rate of return than someone who's been a lower wage earner throughout their lifetime. They're going to get a higher rate of return. So for those teachers that maybe used to get their statements from Social Security when still did paper statements and they saw all those zero, zero, zero, zero, zeros, that doesn't mean that they didn't earn money. It just means that they didn't pay Social Security taxes on those earnings. However, when Social Security looks at that, the way that they see is though they've been a lower wage earning therefore they're going to get a higher rate of return. So back in 1983 the windfall elimination provision was signed into law to help counter that advantage of people having that higher rate of return from Social Security while still collecting their state pension.

Elizabeth Newport:

And so what the windfall elimination provision does is it will reduce someone's Social Security benefit based on their coverage of that or based on their entitlement to that non covered pension. And so depending on how many years of substantial coverage you have under Social Security, your benefit will be higher, but if you have less than 20 years of coverage under Social Security it's going to be reduced quite a bit. But we have calculators online that can help you get a more accurate depiction or estimate about what your own Social Security benefit would be if you happen to be one of those people.

Abigail Doody:

Okay. Yeah. That was my next question is, how does somebody make a decision or figure out what they're going to get from their state pension plan and from Social Security? And probably talking to you both is the best way to do it or those online calculators?

Elizabeth Newport:

Yeah. Yeah. That's a really good idea because when you get your statement in the mail ... Now we already have that at our fingertips. If you create a my Social Security account online you have all of that information right in front of you. But Social Security still doesn't know that some of those folks have paid into a different system. So the number that they get for their estimate isn't necessarily going to be accurate. And so that's why it is kind of neat that it's interactive because you can plug numbers into our online windfall elimination calculator that will help you prepare yourself for what you can actually expect from Social Security. And then yes, absolutely talking to the public employees and see how much you can get from them to make your best decision. Social Security will not reduce your benefit unless and until you begin receiving that pension. So even if you're eligible for it but you're not yet receiving it you can still get your full Social Security. It's just incumbent on you to report to us once you begin receiving that pension so we can make any necessary adjustments.

Abigail Doody:

Interesting.

Ben Smith:

Libby is there an ability ... Essentially I'm just thinking about portability here. So say I have eight years of paying into MPERS. So I paid into that system, that pension benefit system, but the rest of my career maybe was another 32 years I paid into Social Security. So really I have very minimal benefit on a pension side. Is there portability between the two that I could kind of convert a benefit from maybe the Social Security benefit into the public state pension or take the state pension amount and convert those into Social Security credits? Can I do those back and forth?

Elizabeth Newport:

No. What some people decide to do is they decide to take their state pension and roll it into an IRA or they'll do ... There's lots of different things that they could do but you can't convert it over to Social Security taxable wages because you didn't actually pay Social Security taxes on those wages at the time.

Ben Smith:

Got you. So essentially what you could do is ... Again, if there's other ways to receive those funds that might change the calculation on the windfall provision is what you're saying.

Elizabeth Newport:

It may. There's lots of different ways that people can take their pension either in a lump sum or whatever. We have to look at each of those on their own and make that determination. But yeah, there have been circumstances where they've been able to eliminate the windfall provision.

Curtis Worcester:

I want to rotate back to the spousal benefits here for a second. So the idea is ... So say a spouse who's receiving a spousal benefit, the original or the higher earning spouse passes away. I want to talk about what happens if any changes at all to that spouses benefit. The surviving spouses benefit. And I'll kind of start there and then I have more questions after.

Elizabeth Newport:

Sure. Okay, yeah. When a member of a married couple passes away what happens is Social Security will pay that survivor the higher of the two benefits that were received in the household. So if the person who passed away was the one that was receiving the lower benefit we're not going to disadvantage them and pay them the lower one. So they'll continue to get the higher benefit of the two. It makes a difference if it's going from two Social Security payments in a household to one. But we do give them the advantage of having that higher payment to the survivor.

Curtis Worcester:

Got you. And then fast forwarding from there, what happens when that then survivor passes away? I know obviously the benefit will stop but how do say heirs or next of kin kind of communicate with Social Security to kind of notify of that death and then furthermore what happens if they don't and say they keep receiving Social Security benefits that they're not really entitled to at that point?

Elizabeth Newport:

Sure. Yeah. Once somebody does pass away, if they have an adult child or close family friend or somebody, they can absolutely contact their local office to report that somebody's passed away. The state of Maine does implement something called electronic death registration in which the state bureau of vital statistics electronically communicates with Social Security. So we generally find out that somebody's passed away before the loved one has made a call to us. And then even other field offices they have relationships with other funeral homes and so what will happen is when the funeral home staff are meeting with the loved ones and making the arrangements they can fill out a form with the survivor that they then send to the local office and it gives us a lead to contact that survivor to screen for any potential eligibility. So there's a lot in place that doesn't make it incumbent upon the survivors or the family to let us know. But there are cases in which sometimes payments will continue after someone's passed away. And in the case that that happens once we do find out they've passed away, Social Security will send a letter to the estate requesting repayment of any overpaid benefits.

Curtis Worcester:

Got you.

Ben Smith:

I'd like to ask Libby, a topic we are hearing more and more on is fraud. And elder abuse and things like that. So obviously there's a lot of fear, especially as we're getting older anyway, about our finances and kind of what's happening as well. So I'd love to just get into a little bit more about how can folks really protect themselves from someone defrauding their Social Security benefit? And that might be from a claiming side that hey, somebody poses as me and they claim on my benefit or that there's benefits coming to me and they get fraudulently received somehow. So how can somebody protect themselves there?

Elizabeth Newport:

Yep. So Social Security is committed to preventing and detecting and stopping fraud. It's obviously a very difficult feat when there's new scams popping up every single day. We get the people that have spoofed Social Security's legitimate telephone numbers and started calling people and targeting them. And Social Security rarely will contact someone out of the blue via telephone without a notice ahead of time to let them know of an appointment. We've seen some where you get the robo calls saying that your Social Security number has been suspended. That's not a thing. That happened to me and it's not real. So it's incredibly difficult to keep on top of all of the scams because it seems to be new ones every day. The number one thing that we can tell people to safeguard against fraud is to create that online my Social Security account. And it may seem counterintuitive putting your information online when you're trying to prevent fraud but not putting your information online does not preclude you from becoming a target of fraud and identity theft. And so what Social Security has found is that if you create that account legitimately your Social Security number is no longer left susceptible to a fraudster trying to create a false one in your name.

Elizabeth Newport:

The other thing that Social Security does is our office of inspector general has its own fraud hotline. So if you are somebody who's been targeted by fraud with Social Security, you can call the hotline and I can give it to you. It's 1-800-269-0271. And then also if you visit oig.ssa.gov there is an online report that you can submit so you can kind of free write everything that happened, who, what, when, where, and that'll be invested by our office of inspector general. So we try to keep on top of it. We try to help mitigate the fraud as much as we can.

Ben Smith:

And Libby we'll have ... And for those listening in, we'll put those links in our show notes.

Elizabeth Newport:

Oh great. Thank you.

Ben Smith:

So we'll kind of section that underneath the financial abuse side and report financial abuse. So we'll have that there so obviously you want to keep listening here, keep going. But for those just go to the show notes, we'll have it there and you can click on the link and check those links out.

Elizabeth Newport:

Great.

Abigail Doody:

So when we are doing financial plans for people we often hear this statement that Social Security won't be available when I retire right? So it seems that that's becoming more and more prevalent, especially for younger people. If they're doing financial plans in their 30s and 40s. So is there a risk that Social Security won't be there when younger people who are working and paying in on their record now will be there when they hit their full retirement age? And what would you tell people about that assumption?

Elizabeth Newport:

Sure. So of course I can't 100% say that Social Security is going to be there for everybody because I can't tell the future. But what I can tell you is that Social Security's most recent trustees report stated that Social Security will be able to pay all benefits on time and in full until 2035. And so what that means is that the trust funds have reached the brink of asset depletion before. But congress has always made changes to help preserve the solvency of the program in the past. And so basically what this means is that if congress does not act before 2035 then Social Security will only be able to fund 79 cents for every scheduled dollar of benefits payable. Realistically that's never happened. Congress has always taken some measure to help prevent depletion. As I was telling you before, back in 1983 there were changes made for the windfall elimination provision. Also during those amendments they had changes to slowly raise the retirement age. But that didn't begin until the year 2000. So those retirees back in 1983, it wasn't affecting them. It would only affect people in the future.

Elizabeth Newport:

So what I would tell people, again, is that I cannot predict the future but it really is up to congress to make decisions about how to preserve Social Security and they've always done it.

Ben Smith:

So Libby, I really like the example you gave because you were saying essentially in 1983 they were making the changes as of 2000. So it wasn't like it was, "Hey, next year we're making this change and all of the sudden we're moving the goal post. You're going to be 62 and all of a sudden it turned out to be you had to claim at 70 or something." And now my work plans went all the way out the window because Social Security wasn't going to be available. So what I hear you say obviously, we're not looking to the future but looking backwards when there's been changes made that there's been enough leeway that it hasn't been a surprise to somebody that hey I'm 61 today, I am thinking about what my retirement decision is, what my Social Security decision is, when to take it. And that I should take 62 because in eight years I don't know what's going to happen and more than likely I won't be able to take any at that point and then I can't claim till 75. So that's what I hear you say from a past experience is that the changes have been so far in the future that it's not really impacted those at that moment making that decision.

Elizabeth Newport:

Absolutely. Absolutely. And Social Security's not in the business of financial advising. That's up to people like yourself. But what we can do is present the information and as you said before just giving a historical picture, see what's been done in the past. Social Security started as just a means to replace a portion of someone's wages for retirement and since then it's expanded to include disability, survivors, Medicare. So it looks a lot different now than it did then so in the future it could look different but people need to make their decisions with the information that they have at their hands.

Ben Smith:

Mm-hmm (affirmative).

Curtis Worcester:

I have kind of a general question Libby. Sitting where you're sitting and the situations that you've seen in your experience at Social Security Administration, are there some questions that you wish people would ask of people like yourself that maybe they typically don't know to ask when they're getting ready to start the process of claiming Social Security or whatnot?

Elizabeth Newport:

Sure. One thing that we didn't really touch on, we talked a little bit about receiving benefits early, reduced retirement. So in addition to taking a benefit early you're not only agreeing to receiving a permanently reduced benefit but there's also a restriction on how much you can earn while you're still collecting benefits. So working while you're receiving benefits, that can have an impact on much you'll get. So this year in 2021 that annual earnings test limit is $18,960 for the year. So it's not very high. For folks that are coming into our offices if they're 62, 63, if they're coming in and they say, "Last year I earned $50,000. This year I'm really reducing my earnings and I'm only going to earn $25,000." That is a huge personal reduction for their own wages. But that still exceeds the earnings limit for Social Security. And so when you do exceed it you have to pay $1 for ever two in excess of that limit. And so I guess maybe not so much a question but something to be prepared about. If you are planning to take your benefits early you want to have a pretty good idea about what your plans after for work because if you plan to earn more than the earnings limit it may not behoove you to take the benefit when you think you want to.

Ben Smith:

Maybe even in another scenario is those that look to do an early retirement receive Social Security benefits at 62 and they think that they're in good shape, right?

Elizabeth Newport:

Mm-hmm (affirmative).

Ben Smith:

They think things look great. And for whatever reason things don't workout the way they thought. And they go, "I do have to go back to work because there's 40 other reasons that preclude me to go back to work." But now you've claimed Social Security and there's this earnings test that's happening so that's also something here that's going on. You should kind of be thoughtful or start thinking with a little more foresight about, again, downside scenarios, what could happen there and making sure about your certainty about when you claim, right?

Elizabeth Newport:

For sure. Yeah. You want to be prepared in all scenarios. Nobody can prepare for everything but you want to have a pretty good idea about what your plans are for the future. In the case that somebody thinks that they're going to be able to remain under the limit and then perhaps they get an opportunity that they can't turn down, they can absolutely contact Social Security. Let us know, "Look, I actually am going to be working. This is how much I'm going to be earning." We can suspend benefits so that the person does not get overpaid. So if we know ahead of time we can make sure that they don't get overpaid and then the next year we'll follow up with them to see how much they're going to earn, see if we can resume the benefits. So there are ways to help the person but ultimately yeah, you want to have a pretty good idea about what your plans are when you take that step and file the application.

Ben Smith:

And Libby, can you go just one step further? Because one thing I think in maybe in my experience people don't know about is the earnings test and how that might change in the full year of retirement for you in Social Security. Because I know there's a graduation here that happens. Can you talk about that until that full year of remember to then post full year of retirement with the earnings test and what changes there?

Elizabeth Newport:

Yep. So again, that earnings test is $18,960 for anybody who's under the year they reach their full retirement age. Now the year that you reach the full retirement age, that earnings limit does go up for all of the months before which you turn your full retirement age. So that earnings limit for this year is $50,520. So my full retirement age is 67 years old and my birthday's in October. So if I didn't want to wait until October to file an application and I wanted to take my benefits now in March, I could do that. I would just have to be mindful of my earnings from March through September to make sure that they don't exceed the earnings limit. And then as of October first even though my birthday's not until the middle of the month, I would be considered my full retirement age at which point there's no longer an annual earnings test. You can earn as much as you want and no adverse effect to your Social Security.

Ben Smith:

Right. Essentially I could be earning my full Social Security benefit and earn as much as I wanted at that point without impacting that kind of Social Security benefit at all.

Elizabeth Newport:

Correct.

Ben Smith:

Okay. I think that's a really important ... And I'm glad you brought that up Libby because I think that comes up quite a bit about working plans, retirement plans, how do these things ... Because they conflict at times. And while I want to make sure I get my Social Security benefit but, as you said, I got another opportunity where I was going to make more than I thought and it was actually going to be a fun opportunity but it's going to be more than the earnings test and what do I do? That's a really big thing so I'm glad you brought that up. Was there anything else that you thought was something that, again, people should be bringing up or we should be bringing up around Social Security benefits and claiming that maybe they don't typically ask.

Elizabeth Newport:

We can enroll people in Medicare parts A and B but Social Security and Medicare, even though we're always married together, we are two separate agencies. And so while Social Security will take an application for your A and your B, there's a lot of supplements, there's the advantage plans, there's the Medicare part D, there's a lot of private health insurance policies that will ... They contract with Medicare to administer those different programs. Social Security cannot endorse any one over another just because we're government. And so we will recommend people go to their local agency on aging. There's five of them in the state of Maine. They're fantastic. They have federal grants to help them. They're not looking to make any money for any specific insurance company so they're a wonderful resource of unbiased information that we often refer people to when they have questions about Medicare because it can be confusing. Medicare and Social Security, they're always married together and we do a portion of it but there's a lot that I don't know because my background is in Social Security, not Medicare.

Ben Smith:

Yeah. And I really love that because from our end and going back to some of the earlier shows that we did, we actually had Dyan Walsh who's the executive director for the Eastern Area Agency on Aging and she did a fantastic job just going through their program. So obviously from our perspective really the two agencies you really got to go visit is really go talk to Social Security. Really iron down what that earnings is going to be from Social Security but then going talking from our end going to an Area Agency on Aging is really key because they have a really great program. Again, all of them across the state are really awesome. But they do a really great job counseling and walking through all the Medicare options. What's available to you? Again, all the programs. The differences and which would be the best for you in your situation. So those are two key conversations which is why I guess we're a little remissive. We should have had you on like episode four instead of episode 40. You're right on because those are two key visits that everybody, especially in Maine, should be doing so appreciate you plugging that too.

Elizabeth Newport:

Yeah. They're fantastic.

Curtis Worcester:

So Libby, we have reached the final question of this episode.

Elizabeth Newport:

Oh, okay.

Curtis Worcester:

It's a big one. So as we're here on the Retirement Success in Maine Podcast, we like to ask all of our guests, what is your personal definition of retirement success?

Elizabeth Newport:

Personal, okay. So sticking with Social Security I would say that you want to make sure you have your online my Social Security account because even though I'm 20 some odd years away from retirement, Social Security makes up approximately 40% of your pre retirement income. It's never too early to start planning for that. Once I do retire I think success for me would be having everything I need, some of the things that I want, the ability to travel, to be surrounded by all of my favorite people and always to have pets around me. Those are successful goals for me.

Curtis Worcester:

That's awesome.

Ben Smith:

Those are some key ingredients right there. Libby, really appreciate all of your expertise you're sharing with us today. For us this is a lynch pin show that I think with all the conversations we have with our clients will serve them off all of these trade offs, all of these things to consider. But also I think probably the biggest thing that we accomplish today is, Libby, I think you're just a really awesome person to represent Social Security here.

Elizabeth Newport:

Thanks.

Ben Smith:

To really give this ... I think sometimes we view government as kind of being the big bad thing and you being so warm, so gracious with your time today, I think that really does a really great service so we can't thank you enough for coming on the show and hope to have you again sometime.

Elizabeth Newport:

No. It's my pleasure. I would love to come back. Thank you all.

Abigail Doody:

Thank you.

Ben Smith:

Thanks Libby. Take care.

Elizabeth Newport:

Thanks.

Ben Smith:

So really great to have Libby Newport on the show today. Again, Social Security Administration. Just kind of have a show where we're just talking Social Security, but we just wanted to have a show that wasn't just what's going to happen when this happens and just put you to sleep. And I thought Libby did a really great job just bringing energy, really answering the questions in a really relatable way. Again, Social Security is so complex. We obviously couldn't cover this in probably an eight hour show but we wanted to give a flavor of a few things for you today. And again, kind of have some lessons and some takeaways from something we can takeaway from Social Security. So with that we always like to wrap up our shows with some lessons that we personally got out of today. So I'd like to maybe start with Abby. What was something that you took away from our conversation with Libby about Social Security?

Abigail Doody:

Yeah. I really liked how we were talking about MainePERS and how that may offset your Social Security benefit. It's a question that I know we get asked a lot. And so I thought her conversation around it was really helpful. And the biggest takeaway really is talk to both your state pension plan and Social Security so that you can figure out that windfall difference and how that's going to affect your retirement income from both of them. And so I just thought it was helpful for everyone to hear and certainly I'm sure we could go more in depth on it but she did a great job explaining it and breaking down what can be a fairly complicated situation for people.

Ben Smith:

And I thought she did a really great job explaining maybe a misconception that somebody could make if they're looking at their myssa.gov portal and seeing hey, but even though my at a zero kind of wage in this year that it actually still calculates maybe like I have a higher benefit because it's not really taken into that windfall provision. So I think that you could fall into a trap of estimating something that's maybe larger than possibly what it actually is when it gets to retirement. So I think you're exactly right. Being able to work the two and combine them in a way that you can take into account all those provisions and exceptions and things like that. I thought she did an awesome job on that today. Curtis, from your end, what was something that you took away from Libby's talk with us today?

Curtis Worcester:

A piece that really stuck out to me I think it's important to talk about again is the idea of spousal benefits. I know we kind of went down a rabbit hole there with a lot of different scenarios but it's true, there are so many different things that can affect the spousal benefit and I think Libby did a really good job kind of laying out different scenarios and how they could affect or not affect current spouse or ex spouse or any of that. So I felt that was a really important piece of the conversation.

Ben Smith:

Yeah. And I think the important point that highlights is hey, all of us have different things that have happened to us in our lives and there's lots of things that can impact. I might be a teacher. I might have spouses or I might have been divorced. All those things are really impactful to your Social Security benefit. So having that, will I sit down with them or I have a Zoom with them or a phone call even, and just talk through. Here's what's going on, here's the situations. What does this mean? And then get the real answers directly to you in your personal situation. I think was I think a really good ... I know we went down what if this and what if this scenario, which is great, just understanding a little bit more. But it does really highlight that just even having that conversation, again she said three months prior to when you would claim. And just really talking these things through is really helpful, really important. Again, it's a service that they're offering. It's available to you. There's not a invoice or bill that you get from having that conversation with Social Security so they really want to make sure that you just understand what's happening with these benefits there.

Ben Smith:

I'll kind of just highlight personally the thing that I think is really tough for people to understand is that earnings test. Is that if I claim Social Security early, if I claim prior to my full retirement age, there is a earnings test. So I can't earn addition to the amount that Libby stated and I know that will change every year. There's usually some sort of inflation adjustment to those amounts over time. But that's something we're just to keep in mind. So if I do retirement early, I claim Social Security early that if I want to go back to work or hey, I want to be in the workforce and just like we had Barbara Babkirk we talked about working in retirement or Elisa Spain talking about retirement is a pivot, doing something different. Maybe you're earning for the time that you have and it's fun, it's different. But keep in mind if you're claiming Social Security early that there is a limit there and it can really hurt you if you're earning and also not talking to Social Security about it. So again, you can suspend and then you wouldn't be being penalized for the amount that you're taking in excess of your benefit there.

Ben Smith:

So I think those are really important things to point out in today's show. Again, lots more things that we could highlight today. But I think those are three really good takeaways. Of course with our show we're nearing the end here. You can always find more information. We'll post those links that Libby shared with us including some others here at blog.guidancepointllc.com/40. So we're episode 40. We tried to hold out to 62. We couldn't do that today. We decided to do a Social Security episode at 40. So apologize for that. But we're claiming our Social Security guidance early here. So if you want more information go to that link and appreciate you tuning in today as always. Love that you took the time out of your day to listen with us and we'll see you next time.