Social Security is one of the most talked about and misunderstood parts of retirement planning. For many federal employees nearing retirement, online discussions, headlines, and casual advice can create confusion or unnecessary worry. Understanding what’s true and what’s not can help you make smarter decisions about your benefits.
Common Questions Federal Employees Ask
It’s easy to get mixed messages about Social Security. Many employees ask things like:
- Is Social Security going away?
- Will my benefits be tax-free?
- Are my future benefits guaranteed?
- Do potential changes affect me if I’m close to retirement?
While it’s true the program faces some long-term funding challenges, most of the fear comes from misunderstandings or incomplete information. Let’s clear up some of the biggest myths.
Myth #1: “Social Security Is Going Away”
Despite the rumors, Social Security is not ending. It has supported retirees, survivors, and people with disabilities for generations and continues to be a key source of retirement income for millions of Americans.
The Social Security Administration has projected some shortfalls, but those would likely lead to adjustments to benefits, increased revenue, or both. There has been no talk of eliminating the program entirely.
Source: Social Security Bulletin
Myth #2: “Social Security Benefits Are Now Tax-Free”
This one is also false. Social Security benefits are not automatically tax-free. Whether you pay taxes depends on your total income, including wages, pensions, and investments.
Some retirees pay no federal tax on their benefits because their income falls below certain thresholds, but there has been no rule change that makes all benefits tax-free.
Source: SSA Tax Planning Resources
Why You Should Check Your Social Security Earnings Record
Your benefit amount is based on your earnings history. Even small errors in reported wages can reduce your future payments. Federal employees should make it a regular habit to:
- Log in to my Social Security and review their statement
- Compare their reported earnings with W-2 forms
- Report any mistakes as soon as possible since corrections become harder over time
It only takes a few minutes to check your record, and it can have a big financial impact later.
Can Your Benefits Increase Over Time?
Yes, they can. Here are a few ways that happens:
- Each year, benefits may rise through Cost-of-Living Adjustments (COLAs)
- Delaying your benefits past your Full Retirement Age, up to age 70, increases your monthly payment
- Continuing to work after you reach Full Retirement Age may also increase your benefit if those earnings are among your highest
These increases follow official formulas set by the Social Security Administration.
Source: Delayed Retirement Credits
Don’t Forget About Survivor and Divorced Spouse Benefits
Social Security also provides benefits for families and former spouses.
- Widows and widowers may qualify for survivor benefits
- Divorced spouses may qualify in some cases, usually after 10 years of marriage and if they haven’t remarried
Claiming under these provisions will not notify your former spouse, and your claim does not reduce their benefits.
Sources: Survivor Benefits | Divorced Spouse Rules
Social Security Is a Piece of the Bigger Picture
Social Security should not be your entire retirement plan. It’s one part of your overall income picture, along with your federal pension, Thrift Savings Plan (TSP), and personal savings.
Understanding how Social Security fits into your complete financial picture can help you make better decisions about when to retire and how to claim your benefits.
Review your records, stay updated on SSA guidelines, and when in doubt, talk with a qualified federal benefits or retirement specialist who can help you create a strategy that fits your goals.
Floyd Shilanski (00:00)
Have you ever been in a situation where you think you know what you’re thinking about and then someone says something or you read something and you go, I don’t even know what this is anymore. Or do you manage your finances, your life by podcasts, books, or the coffee center? Interesting questions, aren’t there? I forge a landscape of linear final retirement. Give me a minute and then we’ll come back and we’ll talk about some myths, about some certain things and
A way to kind of get your head straight with what I hope you want to do getting ready to retire. With the big, beautiful bill that was just recently passed, there’s been a lot of confusion. And I can’t tell you the amount of emails, articles, white papers I’ve read, and I know the office has read even more, that talk about this, Social Security is going away. Social Security is not going to be taxable anymore. Back and forth, back and forth, back and forth.
And the interesting thing, and I always tell the young people that I mentor and are my clients is the first thing we’ve got to do when we get all this information, get the big fans out, them on medium and blow the smoke away. Because so much of what we’re talking about is smoke and mirrors. right. Is social security going to go away? Maybe, but probably not. That’s an institutional program that’s been around since the 1929s. And I don’t think they’re going to take it away. Will it be modified? Without a doubt.
And in fact, this last week, maybe two weeks ago now, we’ve seen language come out of the House that they want to now, as I’ve said over and over and over, they want to make the Social Security tax apply to all earned income. That way everyone gets hit. In the prior administration, you may remember that they said anyone taxpayers making over $400,000 a year, they would be subject to a higher rate. And that’s okay, I get it, but it’s not enough. Everyone needs to have skin in the game.
So I think you’re going to see that happen. in 19 or 20, I’m bad about saying that 19 anymore. In 2032, Social Security today will not be able to fund full benefits. That’s just a fact unless we do something to change. And I think the administration is going to work to change that. Second thing I’ve heard a lot about is that, know, during the great big, beautiful bill, Social Security was supposed to be tax free. Well,
That’s interesting because Social Security could be tax free if you got your income low enough, all right? So play with words there if you will. But the other part of it is as seniors now, over the age of 65, we are getting a $6,000 exemption for Social Security, but it phases out very quickly. So this isn’t for the rich. This isn’t for the people making, you know, $150,000, $300,000 a year and drawing Social Security. They’re not going to get much of a benefit out of that.
It is simply redirected down to the lower income classes and the tax-free account. So, important to understand that. Now, one of the things that I have been an advocate for for years, number one, don’t plan on Social Security when you retire. If it’s there, great, if not, so be it. And number two is always, always, always track. Always track. Especially when you change jobs, track your Social Security benefits. If there is an error in your benefit,
You got like 18 months to fix it. If you wait until you’re ready to retire 40 years later, you may miss something. Now what does that mean? When you get your W-2 from your employer, all right, and it’ll tell you if you your gross wages, social security wages, and it says how much has been withheld for social security, always track those numbers. And then log on to ssa.gov and they’re not quick. So you’re looking now in 2025, you’re gonna see 23 numbers and maybe 24 numbers.
but you won’t see 25, so sometimes it’s 12 months behind. So I always encourage my clients, run the report, tack it to your W-2, put it in your file, keep track of it. Very, very important, all right? I know, in my opinion, that Social Security is not gonna go away. Will there be modifications? The answer’s yes, all right? Another myth out there is with all these changes, how do I calculate my benefits? It’s simple. Go into ssa.gov, pull down that report, look at it, and it’ll calculate it, all right?
I once had an engineer go through and did it manually. And if you want, ask me to send you that form and I can give you the exact form on how to calculate your earnings and what your potential earnings will be when you get ready to retire. It’s not worth it. This engineer spent four days, come back and said, Floyd, they were wrong. And I said, how much? He says, two cents. Okay. You know, if that’s a whole lot of money for you that you can turn with by all means, I wouldn’t worry about two cents personally, but that’s just me. All right. You need to pay attention for sure. Can you increase your social security payout?
Now, interesting, Social Security payout does get increased every year, but it’s something called cost of living adjustment. And we have seen as much as a 7 % a couple years ago. Now, if you delay taking Social Security from your full retirement age, and most people today listening to this are gonna be age 67 after full retirement age, every year that you delay, you pick up an additional 0.08 % of revenue, so you get more money. Now, if you continue to work after your FRA,
You’re going to get an increase because of the wages you pay into it, but you’re also going to get on top of that, this COLA. And that goes all the way out until you reach max retirement age, which today is currently age 70. So yes, you can increase that. If you go to work after your full retirement age and you’re drawing social security and you’re still paying in FICA taxes, that will increase it every year. I do that right now. I’m over 73.
still doing what I do best and I love to do and I still get a paycheck for it. So every year I get a recalculation of my social security benefits as well as a cost of living adjustments. right. So it’s important to understand the power of that. Now a lot of confusion comes in when we get into the families that are mixed marriages or lost a husband several years ago or a spouse several years ago. And the question to me comes, who can I claim my social security on?
Well, a lot of widows and widowers think their claim on theirs first, which is a fair example, right? But we have to go dig in just a little bit more. If the deceased spouse or the divorced spouse has had a higher earning capacity and you were married over 10 years and you’re not remarried, you may be subject to 50 % of that ex-spouse’s social security benefits. And some people, I’ve had clients say, really don’t want to do that because I don’t want them to know.
Well, interesting enough, Social Security will never inform that ex-spouse. If you’re qualified for it, you’re going to get the money. Recently met with a lady who worked hard all of her lives. Her Social Security was not a lot of money, $1,500 a month, I believe. And her ex had been a doctor, became a surgeon, and now he’s in private practice and he’s retired. So I said, why don’t you get half of his? And then she was very, very distraught. So I said, let’s just find out what it was. All right. So.
interesting, her $1,500 a month got bumped up to $2,800 a month. Of course, she gave away the $1,500, but it was a pretty substantial pay raise and the ex didn’t know anything about it. So that worked out pretty well for her. So as a planner, as they go through the retirement processes, we always ask, have you been married before? Yes. Do you have a divorce certificate? No. Let’s look at that. Let’s look at the decree and see what the ex is qualified for, whether it’s a part of the pension when you get ready to retire.
or social security. So we think that’s extremely important. Knowledge is so much power. We just have to, you just have to pay attention. And Ellen, I used to say it was Churchill, but I’ve been informed Ellen or Roosevelt has this quote, it’s not what you think you know, so it’s what you think you know that just isn’t so. So this is Floyd with Plan Your Federal Retirement. Let’s talk a lot about social security, let the myths out there. If you get something and you go, read this, I don’t understand it, or your buddy says this and they don’t understand it, now pick up the phone.
call, plan your federal retirement, ask to speak to myself, ask to speak to one of the advisors. We’ll be happy to walk through and solve that myth for you. So until next time, don’t worry about Social Security too much and happy planning.