If You Mess Up, Don’t Blame the Government

Tom Margenau advises people to research social security benefits. Rawpixel.com/Shutterstock

Sometimes, people will write to me complaining that the government, specifically the Social Security Administration, has messed them up and cheated them out of benefits they might have been due. But many times, the fault (to trivialize a famous line from Shakespeare’s “Julius Caesar”) is not in our government, but in ourselves.

Here are some examples of what I mean.

Q: When I was 65, I retired and took the free Part A Medicare. But I didn’t want to spend all that money the government was gouging us to take the Part B. However, five years later, when I was 70, I decided I needed the Part B, so I took it and started paying a penalty on top of my regular monthly premium. I’m now almost 80 and I’m still paying the penalty. This just proves my theory that the government is made up of a bunch of crooks who are just out to gouge all of us senior citizens!

A: Well, you didn’t really ask me a question. You just got up on your soapbox and blamed the government for the Part B penalty predicament you find yourself in.

But I think if you are looking for someone to blame, you should check the nearest mirror. If you had done your homework when you were turning 65, you would have learned that your Part B Medicare monthly premium would increase by 10 percent for each year you opted not to participate in that part of Medicare. And you would have learned that the penalties are permanent.

So frankly, you messed up. You were trying to save a few bucks each month by forgoing Part B coverage all those years—and now you’re paying for that mistake. And it sounds like you’re trying to put the blame for that mistake on someone else!

Q: I had done lots of research and lots of planning to make sure my wife and I maximize our Social Security benefits. I waited until 70 (just two months ago) to start my Social Security. My wife, who was always a homemaker and doesn’t have her own Social Security, is also 70 and filed for spousal benefits on my record. We were counting on her getting half of my Social Security, so imagine my shock when we learned that she is only getting about 38 percent of my benefit. Everything I’ve ever read says a wife gets 50 percent. Why is the government cheating us?

A: The government isn’t cheating you. I think you cheated yourself (and your wife) by not doing enough research. Had you done your homework (by reading my book, “Social Security: Simple and Smart,” for example), you would have learned that your wife’s spousal benefit is based on your full retirement age benefit, not on your augmented age 70 rate. So your wife is getting 50 percent, but again, it’s 50 percent of your FRA benefit, not your age 70 benefit.

And just FYI, if you should die before your wife does, her widow’s benefit will be based on your full age 70 rate.

Q: What an outrage! What a scam the government is running on poor educators like me. I was a teacher in Texas and get a teacher’s retirement pension.

Texas teachers aren’t allowed to pay into Social Security, so I don’t have any Social Security of my own. But my husband spent his whole life paying into Social Security, and now we learn that because of some rotten law called the “government pension offset,” I won’t get any of my husband’s Social Security, both now while he is alive and even after he dies. No wonder people don’t trust the government when they are allowed to pull a fast one like this on people like us!

A: There is no scam. There are no rotten laws. There are no fast ones being pulled. And when you read my explanation, you'll see there is no need for outrage. The best way to explain what’s going on is with an example.

Let’s say that somewhere in a Dallas suburb, two married couples are neighbors. Bob and Carol live in one house, and next door, live Ted and Alice. They’ve all recently retired. Bob and Carol both worked at jobs that were covered by Social Security, so now, Bob gets $2,800 per month in retirement benefits and Carol gets $3,000 per month in her own Social Security retirement check.

Neighbor Ted also worked at a Social Security-covered job. But Ted’s wife, Alice, was a teacher. And just for the sake of comparison, I’m going to say that, like Bob, Ted gets $2,800 in Social Security retirement benefits and Alice, like Carol, gets a $3,000 monthly retirement benefit. The only difference is that Alice’s retirement check comes from the Texas Teachers Retirement System while Carol’s check comes from Social Security.

Carol isn’t due (and doesn’t expect) any spousal benefits on Bob’s record. Why? Because the law has always said that one Social Security benefit offsets another. So Carol’s own monthly benefit of $3,000 is way more than the 50 percent spousal rate she'd be due on Bob’s account. Or to put that another way, when you are due two Social Security benefits, you don’t get them both. You only get the one that pays the higher rate.

The Government Pension Offset law, which our emailer called “rotten,” simply says that a public retirement pension, like Alice’s teacher’s retirement pension, will be treated just like a Social Security retirement pension. In other words, it will offset any Social Security spousal benefits that might be due. In fact, before the GPO law went into effect, Alice would have been able to receive her $3,000 teacher’s pension AND a $1,400 dependent spousal benefit on her husband’s Social Security account. Nobody else could get such a windfall.

And in fact, the GPO law cuts teachers a sweet deal no one else can get. It says that only two-thirds of the teacher’s pension will be used as an offset. So back to Bob and Carol and Ted and Alice. When Bob dies, Carol won’t get a nickel in widow’s benefits because, again, her own $3,000 Social Security check offsets dollar for dollar the $2,800 widow’s benefit she'd be due if she didn’t have her own Social Security.

But when Ted dies, Alice will get some widow’s benefits that Carol won’t get. That’s because only two-thirds of Alice’s teacher’s pension, or $2,000, will be used to offset her widow’s pension on Ted’s account. So after Ted dies, Alice will keep getting her $3,000 teacher’s pension and she will get $800 in widow’s benefits on Ted’s Social Security account.

If I were Carol, I'd be the one complaining that teachers get such a sweet deal from Social Security that no one else can get.