Social Security Fairness Act
I’m going to start this article talking about the “Social Security Fairness Act”. This might impact you, or it might impact a friend or relative of yours. If it does, it’s worth following up on this important planning item. In a time of frustration over endless talk of benefit reductions, it’s a rare instance where the laws moved in the direction of more benefits for those whose career, or a spouse’s career, intersected with an employer that didn’t involve Social Security, including many public school systems.
The Social Security Fairness Act was signed into law by President Biden in January, 2025, just before he left office. This legislation repealed the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP), which previously reduced or eliminated Social Security benefits for certain public employees who also received pensions from jobs not covered by Social Security.
Following the enactment, the Social Security Administration began issuing retroactive payments back to January 1, 2024 and adjusting monthly benefits for those affected.
If you are asking yourself what this means, I’ve made videos to explain each of the two provisions. Each video is about 2 minutes and attempts to explain the change using an example.
Repeal of the Government Pension Offset: https://www.kellettwealth.com/videos/v/offset
Elimination of the Windfall Elimination Provision: https://www.kellettwealth.com/videos/v/windfall
In layman’s terms, the repeal of the government pension offset means that a spouse who worked for an employer like Ohio schools would be eligible to receive a spousal Social Security benefit. And, maybe more importantly, if this person’s spouse pre-deceases him/her, this person would receive the spouse’s full Social Security benefit (also known as a survivor benefit). The spousal benefit is typically 1/2 of the working spouse’s Social Security benefit. And the survivor benefit is the full benefit being received by the working spouse before death. In the past, the spouse who worked for the Ohio schools would not have been eligible for either the spousal or full Social Security benefit.
The elimination of the windfall elimination provision means that a person who qualifies for both a pension from a job not covered by Social Security AND who also qualifies Sfor Social Security benefits from work covered by Social Security will be eligible to receive BOTH the pension and Social Security.
Several of us in the Kellett Wealth office can relate to the second provision, the windfall elimination provision, albeit on a small scale. As part-time coaches for Madeira, we get paid a small salary and pay into the state teacher retirement fund (pension). Historically, that small amount of money paid into the state teacher fund would lower our Social Security benefit in retirement. The Social Security Fairness Act eliminates that provision. We are now able to receive that small pension without it impacting Social Security. For someone who worked a split career, say 10 years in a job where they paid into Social Security and separately worked 25 years as a teacher in Ohio, the retirement benefit impact could be substantial.
For those of you who are active on social media, you may have noticed we are posting videos like the ones above on Facebook, Instagram and LinkedIn. Follow us on those social networks for videos involving financial planning, personal finance, and other topics. You can friend me on Facebook, follow me on Instagram, or connect with me on LinkedIn.
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In my last article, I talked extensively about Trump’s tariff plan and my analysis of his approach. This was the day before the large-scale announcement known as “Liberation Day”. While the analysis generally captured the essence of what he said and did, a lot has happened since then. Many of the details have been modified, and there continue to be conflicting accounts both of the rationale and long-term outlook. Generally speaking, my sense is that the administration is trying to rewrite trade terms that the administration believes have historically been unfavorable to the US rather than to bring manufacturing back to our shores, at least in any large scale way, with the possible exception of pharmaceutical drugs, computer chips, and some components of the automotive process.
As I said in that article, copied in again here https://www.kellettwealth.com/library/trade, the lack of certainty makes it nearly impossible to forecast the outcome. This has led many companies to pull their financial guidance, and I won’t attempt to make any sort of short-term market calls.
Relatedly, economists continue to say we are headed to a slowdown, but the data continues to confound the expectations. Interest rates are now higher for two years, usually leading to a slowdown. And the economy contracted by .3% of GDP, usually a sign of a slowdown. However, the introduction of the tariffs drove a stockpiling of imported goods, which is a subtraction from GDP. Said another way, the introduction of the tariffs caused short-term behavior that skews the number and makes it more difficult to determine the direction of the economy.
There are many recession indicators. But arguably the best indicator is employment, and specifically employment related to cyclical sectors like home building. If we get to a point where orders for new homes slow ➞ which leads to less homes being built ➞ which leads to layoffs in construction and manufacturing, then we will most likely to see the long-forecast recession.
From a market perspective, it’s been nearly a “roundtrip” from April 1 to today. Down big, and back to where we started. The NASDAQ 100 has done slightly better than that, up 3.4% for the time period. However, it was down more than the S&P 500 earlier in the year, leaving it down 4% for the year.
In closing, the Trump tariff rollout created uncertainty that pushed markets lower, only to see them recover over the last 30 days. Which leads me to end with a quote from arguably the greatest investor of all-time, who recently announced he will “retire” at the ripe old age of 94. Warren Buffet once said “We have long felt that the only value of stock forecasters is to make fortune-tellers look good.”
Jared
What’s Your Financial Story?
** Wharton School of Business article: https://budgetmodel.wharton.upenn.edu/issues/2023/10/6/when-does-federal-debt-reach-unsustainable-levels
All other YCharts graphs are created by me, Jared Kline.
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