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Old 09-11-2014, 09:37 AM   #21
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Originally Posted by Tadpole View Post
I'd like to suggest people read the following paper by Peter Diamond and Peter Orszag for perspective on GPO/WEP which came out of a recommendation made by the Greenspan Commission in the 80's. It was an attempt to correct a benefit that was overly generous to wage cohorts that didn't pay into SS as long (ie ROI) as their SS wage cohorts and who, additionally, received an alternative source of retirement income. For two people with the same earnings, having that 6-12+% (depending on how you believe SS affects wage) for most of their careers is a windfall for investment in retirement accounts or savings (or, admittedly, life style if they actually collect the money).

Lack of understanding of the process and the mechanism of SS earnings favoring lower income workers confuses many people. Our professional retirement association parrots yearly about their goal to get WEP/GPO eliminated to restore the "rightful benefits". So people affected generally feel like they are being ripped off, but they do not understand entire process. A friend of mine with a non SS pension was barely affected by WEP because he had over 20 years of substantial SS earnings prior to a career change.

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Old 09-11-2014, 09:42 AM   #22
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Tadpole, that is heavy reading, but it explains very well why not doing the WEP or GPO offset is very unfair to those who have paid into SS for most of their life. Thanks.

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Old 09-11-2014, 01:47 PM   #23
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[QUOTE=molly;1492324]"I don't get it. Why would anyone expect to collect SS if they didnt pay into it?"

Not so........I was a public school teacher fulltime for 8 years in a state that paid SS. I also subbed for a few years and worked at a hospital for 4 years. Moved to LA - where teachers don't pay into SS (never had heard of such a thing and didn't realize it until it was too late). I get slammed really hard. I would have been better off working at WalMart than working for the LA school system.

I learned about GPO back in the 80's while still teaching in CA, so tried to plan accordingly. (Which meant saying, "LitGal, you better prepare yourself. 2/3 of anything you get from STRS will be subtracted from your SS.") So, even though I'd worked through college and, after moving to OH, taught 12+ yrs. in a private school that paid into SS from my paycheck, my SS will be $0. Yes, I have the 40 Qtrs., but the SS benefit will be less than the 2/3 subtracted from my CA STRS.

Depending on the day, or the weather, I've looked at the many years of SS payments in several ways:

1. While the SS deductions have been "money down the drain" for me personally, I can pat myself on the back that I've done some civic duty by "supporting the system."

2. If I become widowed and wait until FRA or later, my 2/3 STRS can be subtracted from DH's SS. So, then, I'd get about $1,000/mo. as his survivor.

3. The benefits in #2 can be enjoyed guilt free, due to #1.

So, the piper will have been paid; but I'm hoping I might be, too.


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