Should You Jump on the Social Security Maximizing Bandwagon? If you are like me, almost every week your mailbox has at least a couple advertising fliers — usually from financial planners — with misleading come-ons like this: "You could be missing out on hundreds of thousands of dollars in Social …Read more. When You Are Due Two Social Security Benefits Just about anyone who has worked and who is married or who has ever been married is potentially due two Social Security benefits: his or her own Social Security benefit and possibly a dependent benefit on a spouse's Social Security record. I've …Read more. Widow Should Switch to Her Own Retirement Benefits Q: I started getting widow's benefits when I was 66 years old. At the time, the Social Security people checked and told me my widow's rate was higher than my own retirement benefit — by several hundred dollars. I am now about to turn 70. I'm …Read more. Full Retirement Age for Widows About a month ago, I wrote a column in which I explained how "full retirement age" (the age at which a person can claim 100 percent of his or her Social Security retirement benefits) is going up. To quickly recap, FRA is 66 for people born between …Read more.more articles
A Social Security Lesson for Teachers
It's once again time for me to turn the tables on my old teachers by asking them to take a seat and pay attention as I deliver my semiannual lecture on the Social Security offset.
This lesson isn't directed at all teachers — just those in states where teachers do not pay into Social Security. The two biggest such states are California and Texas, but there are a few others. And teachers really are not the only audience for this lecture. Anyone who works at a job that is not covered by Social Security (that's a little less than 10 percent of the population) is impacted by the same rules. But for some reason, it seems to be teachers who are most confused by the law. I can tell by the e-mails I get that many teachers incorrectly assume that they have been singled out for Social Security offsets that they believe impact no one else.
The law in question is the government pension offset law. In a nutshell, that law says that an amount equal to two-thirds of a non-Social Security-covered pension must be deducted from any Social Security dependent's benefits a person might be due. In effect, the law prevents most teachers (and other folks who work at jobs not covered by Social Security) from collecting wife's, widow's, husband's or widower's benefits from a spouse's Social Security record.
What these teachers don't realize is that the government pension offset law simply treats them in the same way that all other working people have always been treated. In other words, if a woman who worked at a job that was covered by Social Security gets a Social Security retirement pension, that pension has always offset any spousal benefits she might have been due. Before the GPO law went into effect, teachers were among the few working people in this country who could get their own retirement pension AND a dependent's benefit from Social Security.
And the GPO law actually gives teachers a bit of a break. Social Security retirement pensions offset spousal benefits dollar for dollar. But a teacher's retirement pension causes only a three-for-two offset. In other words, for each $3 you receive in a teacher's pension, you lose only $2 from Social Security spousal benefits.
To help illustrate the law, I'd like you to meet Bob and Carol — and their neighbors Ted and Alice. They live in a nice suburb of Dallas. Their stories explain why the pension offset is fair.
Bob and Carol both worked all their lives. And they worked at jobs that were covered by Social Security. In other words, Social Security taxes were deducted from both their paychecks.
Neighbor Ted also worked at a job covered by Social Security.
Bob retired and is getting $1,200 per month in Social Security retirement benefits. Carol actually made a little more than Bob most of her life, so she's getting a Social Security retirement pension of about $1,500 per month. Carol can't get (and frankly, doesn't expect) any wife's benefits on Bob's record because her own Social Security benefit precludes any spousal payments. In other words, Carol's own retirement benefit offsets any wife's benefits she might have been due on her husband's record. And for that matter, Bob can't get a husband's benefit on Carol's record because his own retirement benefit would offset it.
Across the street, Ted is receiving roughly the same Social Security benefit as Bob, about $1,200 per month. His wife, Alice, is getting a $3,000 monthly Texas teacher's pension. Before the pension offset law was in place, Alice would have been eligible for a $600 dependent wife's benefit from Social Security in addition to her teacher's pension. But now, the government pension offset law prevents that from happening. Alice thinks she and other teachers are being singled out for Social Security penalties. What she doesn't understand is the law treats her the same way her neighbor Carol has always been treated. Again, it says that neither woman will get a dependent wife's benefit from Social Security because she is getting her own retirement pension.
For years, teachers and their unions have been "fighting to change this unjust law." And every year, they find some pandering politician who needs a few votes from educators to introduce a bill to eliminate the government pension offset. And every year, the bill goes down to defeat because, as Bob and Carol and Ted and Alice have shown you, the law is eminently fair.
Having said that, I will admit there is a selfish side of me that hopes these fighting mad teachers prevail. Because you see, I am also impacted by the offset. I get a civil service retirement pension that offsets any husband's benefits I might potentially be due on my wife's Social Security record. That's the selfish side of me. But the practical side of me wonders why in the world I should be able to get my comfortable civil service retirement pension AND a dependent's Social Security benefit — especially when the law prevents more than 90 percent of the population from doing the same.
To learn more about the government pension offset, and a related law called the windfall elimination provision, send an e-mail to firstname.lastname@example.org and ask for a free copy of my pension offset fact sheet.
If you have a Social Security question, Tom Margenau has the answer. Contact him at email@example.com. To find out more about Tom Margenau and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2010 CREATORS.COM.