A Social Security Owner’s Manual by Jim Blankenship

Jim Blankenship is a Certified Financial Planner, Enrolled Agent, and the owner of Blankenship Financial Planning in Illinois. I have been following his blog Getting Your Financial Ducks In A Row for some time. I also referred to his online publication The IRA Owner’s Manual when I had a question about inherited IRAs. Jim knows his stuff.

I admit I haven’t paid much attention to Social Security because I’m still far from being eligible for Social Security. When Jim Blankenship published a new book A Social Security Owner’s Manual, I took the opportunity to learn more about Social Security.

The "owner’s manual" part in the title is just figuratively speaking. The Supreme Court ruled back in 1960 in Flemming v. Nestor that nobody really "owns" Social Security benefits. Paying Social Security taxes is just that — paying taxes. It has nothing to do with receiving benefits. The ruling has been the law of the land for 50 years already, but I still hear people talking about "I earned it." That’s simply not true. You don’t earn it no matter how much you paid in taxes.

Congress is free to increase, decrease, or eliminate benefits at will, whether those affected paid or didn’t pay Social Security taxes, whether they already started receiving benefits or not. That’s why I haven’t paid much attention to Social Security until now. I figure by the time I’m eligible in 20 years or so, the rules will have changed.

That said, Jim Blankenship’s new book is a great guide for those who want to know the rules as they are now. It’s not a huge book, only 150 pages. It tackles the complex subject very well.

The book starts with the basics: how one becomes eligible for benefits and how the benefits are calculated. The rules are complex, but that’s not Jim’s fault. Jim explains them clearly. If you are inclined to learn the math, Jim shows how the math works. If you don’t care about the math, you can skim over the math and still get the gist of it.

Part Two of the book talks about how Social Security benefits are taxed, especially for people who work and receive Social Security benefits at the same time. Here I think the book can be expanded a little more on how a retiree should structure the withdrawals from other accounts, taking into consideration the impact on the tax on Social Security.

Part Three talks about working with Social Security Administration and the complex subjects of Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Neither WEP nor GPO affects me — you or your spouse must have a job that doesn’t pay into Social Security. It beats me why we still don’t include everyone in the system.

Part Four is the meat of the book. It talks about tips and strategies:

  • when to claim Social Security;
  • if you are married, who should claim early and who should claim late;
  • maximize Social Security benefits with do-over (now limited), double dipping, and file-and-suspend

Social Security’s complex and, in my view, outdated rules create opportunities for the informed to squeeze more benefits from the system. The strategies are all legal. Those who don’t learn about them will be at a disadvantage.

If you or your family members are close to being eligible for Social Security, it behooves you to spend the $15 or so on a good book about Social Security. The payoff will be tremendous. I would recommend Jim’s book.

After reading it, I have a much clearer understanding of how Social Security works today. I also realized how some things shouldn’t be the way they are now. For instance I wrote about Social Security benefits will increase more for retirees than for those still working. I learned that after reading Jim’s book. I will comment on a few more nuggets in the coming weeks.

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  1. Random Poster says

    “The Supreme Court ruled back in 1960 in Flemming v. Nestor that nobody really “owns” Social Security benefits.”

    True, but the Supreme Court has made rulings that, with the benefit of hindsight, require reversal or clarification. Which is to say, the Supreme Court has made some bad and incorrect rulings before.

    “Neither WEP nor GPO affects me — you or your spouse must have a job that doesn’t pay into Social Security. It beats me why we still don’t include everyone in the system.”

    From my limited experience with WEP, I think it has something to do with the power of teacher retirement unions and retirement plan providers.

  2. Harry Sit says

    My comment on the Supreme Court ruling isn’t whether the said ruling is right or wrong, just or unjust. It is the law until it’s changed. After 50 years, some people still pretend it isn’t. They keep going with their own version of the reality: “I paid into Social Security. Therefore I own the benefits.” Not so.

  3. dd says

    Just found your blog and found it very useful and informative. It is important to know about WEP and GPO, because some individuals who begin teaching late in their careers in state systems that are not part of SS may be caught in between and realize much less from both systems than anticipated.

  4. Ray B says

    A question you can easily answer.
    We are thinking about having my wife start benefits at 62 based on her own account,
    Then applying when I am 66 for spousal benefits based on her account.
    She is 6 months younger than me so do I get my 50% spousal benefit of her age 65.5 amount
    or do I need to wait for my 66.5 age to get 50% of her age 66 benefit.
    when I reach 70 and start my full benefit can my wife then collect 30% of my then full benefit.
    thanks in advance for any clarification

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