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We are excited to share some key updates impacting Social Security, along with valuable insurance planning strategies designed to help manage and protect against property and casualty risks.
Leveling The Field - Social Security Fairness Act
As part of our ongoing effort to keep you informed about important legislative developments that may impact your financial future, we want to bring your attention to a significant change in Social Security policy.
While the possibility of eliminating income taxes on Social Security benefits remains uncertain, a major shift has already been enacted for 2025. Signed into law at the beginning of the first quarter, the Social Security Fairness Act marks a meaningful reform to the system, addressing provisions that have remained largely unchanged for nearly 50 years. This new legislation has the potential to impact a wide range of beneficiaries, particularly those who have navigated both public and private sector employment.
A major byproduct of this new act is an increase in benefits for over three million existing Social Security beneficiaries. The increase is the direct result of the elimination of two mainstay rules, known as the Government Offset Provision (GPO) and the Windfall Elimination Provision (WEP).
Each of these provisions, when enacted, reduced benefits for those individuals receiving pensions from jobs not covered by Social Security.* This directly affected public service retirees including the likes of teachers, firefighters, law enforcement, and specific federal employees, to name a few.
Reduced Social Security retirement and disability benefits for individuals who received a pension from a job where Social Security taxes were not paid. The intent was to prevent individuals from receiving a "windfall" benefit by having access to both a public pension and Social Security retirement benefits.
Reduced spousal or survivor Social Security benefits for individuals who had a public pension from a job where Social Security taxes were not paid. The GPO was intended to prevent spouses or widow(er)s from receiving a "windfall" benefit by having access to both public pension and Social Security spousal or survivor benefits.
The Social Security Fairness Act repeals these rules and aims to make benefits more equitable for those affected by either benefit reduction. Please visit the SSA.gov page if you are potentially affected by either of these rules.
We highly encourage you to confirm that your contact information, including mailing address and direct deposit information, is up-to-date with the Social Security Administration for related correspondence. Given that the repeal is retroactive to January 2024, those penalized by WEP and GPO are owed back payments – likely a lump sum payment – for benefits withheld over the past year.
*Employment where neither the employee nor the employer paid Social Security taxes, and therefore, the earnings from that job won't contribute to Social Security credits for retirement or disability benefits.
Storm Proofing Your Finances with Property and Casualty Insurance
One of our newest team members on the Wealth Planning team, Janelle, joined us after living most of her life in Florida. Last fall, her condominium complex fell victim to a natural disaster, Hurricane Milton. Fortunately, the tenants and her unit came out unscathed. However, two of the four buildings within the HOA had significant damage which resulted in her having to pay her pro-rata share of the insurance deductible for HOA’s policy. With a colleague having recently navigated this herself, along with the rise in natural disaster claims nationwide, we wanted to draw on Janelle’s first-hand experience to help you best navigate these natural disasters and take appropriate protective measures.
It is imperative to be prepared before, during, and after these types of disasters. Having adequate coverage in place is the first step. We highly encourage working with a licensed insurance agent, as each person and each situation requires different coverage. Secondly, preparing for possible claims before disaster strikes will ensure that one receives their insurance payout in a timely manner, without additional hiccups. Lastly, it is important to work with a tax preparer in listing all excess expenses due to a natural disaster so that one can claim disaster relief based on FEMA declarations.
While this may seem like a cumbersome undertaking, we’ve made a handy checklist to ensure you are following the correct steps if ever in this situation – Click HERE to access the checklist.
Finally, we would be remiss not to mention the recent market volatility and how it affects wealth planning. Now is a great time to remember that we can control some factors of our financial world, including keeping six to twelve months of essential living expenses on hand, communicating any upcoming cash needs to your Private Client Advisor, and focusing on your long-term wealth plan. Markets in flux can create opportunities for retirement planning and gifting, utilizing the tools available to us to take advantage of down days. Setting up time with one of our Financial Planners can help you strategize what might be best for you and your family, as well as providing peace of mind during volatile markets.
If you have a family member or friend who could benefit from personalized wealth planning, we’d be honored to assist them.
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