I am writing to you for some advice regarding my Social Security Benefits.

I was working with Northwestern Mutual with a paid financial advisor. Four years ago, he helped to combine three different 401(k) accounts into one. He advised me to start collecting my PERA/MERF pension benefits at age 62 which I did. I had been consulting with him about future retirement and thought I had all my ducks in a row. He advised me to start collecting my Spousal SS benefits at age 66 as I continued to work full time. As Covid hit, I decided to retire from the healthcare field earlier than I had planned at age 66 ½. With the advice of my financial planner, I filed for spousal social security benefits when I turned 66 which was in December, 2019. Because of Social Security offices being closed due to Covid, I received a retro-pay check of approximately $7,500 in August, 2020 which was back pay for the $1,100 I was to received monthly for spousal SS benefits. I retired August 1, 2020 and put off receiving my own SS benefits until January, 2021. In November, 2020, I received a letter stating that because I was receiving a government pension, my spousal benefit check would be cut in half to just over $500 per month and my own SS benefits would also be less. How does MY receiving a pension affect what my ex-husband was contributing to SS which is how the SS Spousal benefits would be calculated. I was in shock. According to my financial advisor, I was planning on receiving approximately $3,500 per month as income. Needless to say, in reality I was to received about $1,200 less per month. When I called him he said “Sorry, I didn’t know.” This was shocking to me with no other explanation. Then I received another letter from Social Security telling me I had to pay back $6,901 to social security because I was over paid, which I did. If all this wasn’t stressful enough, today I received another letter from SS telling me that they are taking away ALL of my spousal SS benefits because my own benefits are the higher of the two? I met ALL the qualifications required to receive the spousal benefits with my birthday, December 20, 1953, happening well within the timeframe before January, 1954 when this government benefit expired.

I know several people who make more than their spouse, who are in the same situation that I am in and are still collecting their spousal benefits. My ex-husband is collecting $750 off of my SS benefits, still working full time in a very successful self employed Real Estate Appraisal office making anywhere from $150,000 - $200,000 per year.
I am so confused about all this and need some legal advice to make sure all of this is legally happening to me.

My financial advisor said he didn’t know that working for the Minneapolis Public Schools was a government agency. Is it? Shouldn’t he have known? I contacted Northwestern Mutual’s corporate offices to investigate this for me. Do they owe me any compensation for wrong advice given by a paid professional which is so affecting my life? Can the Social Security office take money I thought I was going survive on away? I am very stressed out over all of this and would not have retired at this time if I had known any of this. Now my SS benefits have also dropped from $1,587.00 per month to $1,395.00 per month less another $148.00 for Medicare taking it down to $1,247 per month. I placed all my trust and confidence in my paid professional financial advisor that he was giving me correct information. I based my life decisions on his word. Now, I am devastated and scared that I won’t be able to live and pay my bills. I most likely wouldn’t have retired at this time. I was working with vulnerable adults in senior living with Covid a very real part of my daily life there. It had gotten so hard for me to reassure them everyday while they were living in isolation, declining with despair. I had become the go between for them and their families entrusted to give support and information, shedding tears with the residents and their distraught families. Doing this on a daily basis got to be so emotionally draining for me. When my financial advisor told me that I could make it financially if I were to retire, I thought I was given another option. I am now very distressed that I took his advice, so much so that it is affecting my health.
I just need some professional advice as to what I can do now? Shouldn’t my financial advisor be responsible or liable for giving me misleading, wrong information?

I don’t have a lot of funds that I can spend on legal advice at this time because of this unexpected reduction in my monthly income. I am really afraid that my livelihood is threatened now with all of these reductions which I had not counted on. Can someone offer me some legal advice as to what I need to do?

Thank you so very much.
Christine

Hi Christine,

My expertise is limited to Social Security benefits, so I can't tell you whether or not your financial advisor can be held liable for giving you incorrect advice.

What I can tell you is that if you're receiving a pension based on your work for a government agency where your earnings were exempt from Social Security taxes, then any Social Security spousal, divorced spousal, or survivor benefits for which you would otherwise qualify would almost certainly be offset by 2/3rds of the gross amount of your government pension. That's due to the Government Pension Offset (GPO) provision (https://www.ssa.gov/pubs/EN-05-10007.pdf). Government employment for purposes of GPO includes all levels of government in the U.S. (i.e. federal, state, municipal, county, etc.).

There is a question on applications for Social Security retirement and spousal/divorced spousal benefits that asks whether or not you receive a government pension, so if you told Social Security about your public school pension on your application then I don't know why they didn't start out offsetting your spousal benefits instead of overpaying you. In any case, though, if Social Security incorrectly pays benefits they are required to ask for the incorrect benefits to be returned. But, you can file an appeal if you don't think the overpayment is correct, or you can file for waiver if you believe that the overpayment was not your fault and if you're financially unable to repay the overpayment.

There is another provision called the Windfall Elimination Provision (WEP), which only affects Social Security retirement or disability benefits payable based on a person's own Social Security covered earnings (https://www.ssa.gov/pubs/EN-05-10045.pdf). Your pension from the public school system, assuming that you didn't pay Social Security taxes on your earnings there, would mean that your own Social Security retirement benefits will likely be reduced due to WEP.

What doesn't make sense is that you've been told that you can't collect divorced spousal benefits because your own benefit rate is higher than your divorced spousal rate. Since you were born prior to January 2 1954, at full retirement age (FRA) or later you are permitted to file a restricted application just for divorced spousal benefits only while letting your own Social Security retirement benefit rate grow until age 70. Therefore, assuming that you restricted your application to divorced spousal benefits and that you haven't yet applied for your own Social Security benefits, then even if your own benefit rate would be higher than your spousal rate it wouldn't prevent you from collecting spousal benefits.

Assuming that you would prefer to collect only divorced spousal benefits (GPO permitting) and allow your own benefits to grow until age 70, I would suggest that you contact Social Security and tell them that your intent was to file a restricted application for divorced spousal benefits only. I don't know whether or not a mistake was made by you or by Social Security at some point in the filing process, but hopefully they will be able to sort it out so that you can collect divorced spousal benefits and delay your own benefits until age 70.

If Social Security signed you up for your own benefits by mistake, or if you haven't filed for your own benefits and Social Security is incorrectly telling you that your own higher benefit rate prevents you from collecting divorced spousal benefits, you may want to file a formal appeal request. For more information on that process, refer to the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10041.pdf.

Best, Jerry