Social Security Cards on blue background.

Pay into Social Security, and you receive the benefits. Unless the system goes insolvent, this has long been everyone’s assumption about how the system worked. Unfortunately, a federal law dating back 40 years known as the “Windfall Elimination Provision” discriminated against employees who had paid into Social Security before transferring to a state position that had opted out of Social Security.

To illustrate, a hypothetical: Diane and Alfredo are a married couple who started working for the same company on the same day and paid identical amounts into the Social Security system for 20 years before the company went bankrupt.

The couple decided that Diane would stay at home while Alfredo went to work for the state for another 20 years, where he paid into PERA but not into Social Security.

At retirement, logic, and fairness both dictate that Diane and Alfredo should receive the same Social Security benefits since both paid exactly the same into the system over the same timeframe. But when has the government ever been about fairness?

Instead, the “Windfall Elimination Provision” penalized Alfredo for working in a non-social security position by significantly reducing his benefits below what Diane would receive.

Why does this matter to family law cases? Because state courts cannot divide Social Security benefits at divorce, Diane would have extra Social Security to live on after a dissolution of marriage.

Social Security Fairness Act HR 82

Earlier this month, President Biden signed the Social Security Fairness Act that eliminates the “Windfall Elimination Provision”, so two workers who have paid the same into the Social Security system will receive the same benefits, regardless of whether one of them goes on to work in a non-covered state position.

This will address at least part of the unfair treatment surrounding Social Security in a divorce. However, a significant problem remains – while family law judges can divide state pensions like PERA, they still cannot divide Social Security. To illustrate this problem, I’m changing the above hypothetical.

Diane and Alfredo were married the day both started work. Diane worked in the private sector for 40 years, accruing $3200/mo in Social Security benefits. Alfredo worked for the State of Colorado for 40 years, paying into PERA but not Social Security. Alfredo accrued $4000/mo in PERA benefits.

At divorce, Diane keeps her $3200 Social Security since federal law prohibits it from being divided as a marital asset. But she also gets half of Alfredo’s PERA, so she ends up with $5200/mo after retirement ($3200 SS benefits plus $2000 of the PERA), while Alfredo has just $2000/mo (his half of the PERA). This truly epitomizes “what’s yours is mine, and what’s mine is mine.”

Sure, the judge has options – the court can consider Social Security as an “economic circumstance” when dividing marital property (but cannot do a dollar-for-dollar offset or decline to divide the PERA), or consider spousal maintenance. But neither remedy is assured, and neither would make up for the entire imbalance, so in the end, Alfredo still loses.

Bottom line – while the Social Security Fairness Act corrects one problem, others remain in how government pensions are treated in state divorces.

Award-Winning Southern Colorado Divorce Lawyers

social security

U.S. News & World Report calls Graham.Law one of the Best Law Firms in America, and our managing partner is a Colorado Super Lawyer. Our family law attorneys have years of experience helping clients navigate the Colorado legal system. We know Colorado divorce & family law inside and out, from complex multi-million dollar property or child custody cases to basic child support modifications.

For more information about our top-rated El Paso County family law firm, contact us by filling out our contact form, calling us at (719) 630-1123 to set up a free consult, or click on:

Colorado Family Law. Period.