Don't forget about the Government Pension Offset program
by Phil Moeller |July 28, 2019
In this week’s
column, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your
Costs and co-author of the updated edition of How to Get What’s Yours: The Revised
Secrets to Maxing Out Your Social Security, addresses how a
company pension might affect your Social Security payout.
Got a question of
your own about Medicare or Social Security?
Send it to askphil@considerable.com.
Will my pension hurt
my benefits?
Question:
Dear Phil,
I read with great
interest one of your recent columns on Social Security benefits. I have a few
questions, though, that weren’t covered in the article and wondered if you
would be willing to provide some guidance.
I am 64, working for
the federal government and have an “old” type of pension plan in which I do not
have payroll taxes paid to Social Security.
At my agency, we have
mandatory retirement at 65, and I will likely retire early next year. I do have
earlier work history that includes payroll taxes, but I’ve accumulated only 36
hours of credits – four short of being eligible for Social Security benefits.
My ex-spouse is 66
and filed for Social Security several years ago as soon as he was eligible, in
part because he suffers from a terminal illness. We were married 26 years,
have been divorced seven years, and I have not remarried. When I mentioned
to him the possibility of collecting Social Security as an ex-spouse he raised
the following concerns:
1) My future
government pension could be reduced by any Social Security payments I receive.
Is this correct?
2) Am I likely
to do better by waiting to work four quarters after retirement to collect
Social Security on my own?
3) Would my
eligibility to collect under this provision end when he passes if I don’t apply
while he is still alive?
Thanks very much for
your guidance. Best wishes — Amy
Answer:
Dear Amy:
In order:
1) Yes. The Government Pension Offset
(GPO) program would affect your ex-spousal benefits. It is necessarily not
dollar-for-dollar, so filing for this Social Security benefit is usually still
a good idea. If you can hold off filing until your own full retirement
age, your benefits will reach their maximum
amount. And should you go back to work for a while to earn those
four credits, any earnings made once you’ve reached FRA are not subject to
reductions from Social Security’s earnings test.
Lastly, because
you’ve not worked enough to file for your own benefit, filing for an ex-spousal
benefit will not trigger the simultaneous filing for your own benefit.
2) It depends on the
size of your ex-spousal benefit. With only 40 quarters of covered earnings,
your own Social Security benefit is likely to be quite modest. In addition, it
would be affected by another Social Security program for people with non-Social
Security pensions who claim Social Security as well.
This is called the Windfall Elimination Provision (WEP).
It’s could take you some time to figure out which approach is better, but one
way or another your Social Security is either going to be WEP’d or GPO’d!
3) When your
ex-husband dies, your right to an ex-spousal benefit would be replaced with
your right to an ex-spousal survivor benefit. This benefit is much larger than
the ex-spousal benefit.
Welcome to the world
of confusing Social Security benefits and terms!
No comments:
Post a Comment