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Survivor benefits and WEP or GPO
Old 01-05-2012, 04:55 AM   #1
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Survivor benefits and WEP or GPO

Hey all-first post so please excuse if redundant. I am going to retire from a teaching position this year. Our pension plan is administered by the state of Ohio. I have not payed into the social security retirement system. My wife passed away several years ago so I am eligible for survivor benefits. I have questions relative to retirement and survivor benefits. My wifes benefit will pay $1440/month at age 60 or $2000 a month if I wait until age 66 . My pension will pay about 1900/month at age 60.I think I understand the WEP offset (.66 x 1900). I will probably be in a 15% tax bracket.

1. Should I delay taking my teaching pension until age 66 and start drawing the social security survivor benefit? (This would increase my benefit by about 8%.)

2. Should I delay taking the survivor benefit until age 66?
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Old 01-05-2012, 05:42 AM   #2
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Hi bbohardt, welcome to the forum. I am sure other members will offer their opinions, but in the meantime, my first question is how much money do you need to live? If you don't need the money now and delaying increases the payout, that looks to be the thing to do.
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Old 01-05-2012, 06:35 AM   #3
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I need at least one souce of income. I have looked at different angles but can't decide which direction. I keep thinking I'm missing something. Thanks.
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Old 01-05-2012, 07:29 AM   #4
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Isn't the Government Pension Offset the law you need to worry about? IIRC that will knock out a big chunk of your benefits.
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Old 01-05-2012, 12:43 PM   #5
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Quote:
Originally Posted by donheff
Isn't the Government Pension Offset the law you need to worry about? IIRC that will knock out a big chunk of your benefits.
That was my immediate thought when I first read the initial post. That is one potential dreadful haircut for some people.
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Old 01-05-2012, 01:36 PM   #6
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The OP said WEP but looks like he meant GPO since he had the reduction correct (2/3 of his pension amount will be subtracted from the ss benefit).

If the $1440 is the ss amount before GPO reduction of $1267 (2/3 of $1900), you won't receive much ss (less than $200 a month) unless you delay taking it. If you need the income, looks like maybe taking the pension at age 60 and delaying ss might be the way to go.
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Old 01-05-2012, 03:42 PM   #7
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If I understand the OP correctly, here are the three main scenarios:
    1. Take pension and SS now - $2,073
    2. Take pension now and SS at 66 - $2,633
    3. Take both at 66 - $2,684
The optimal option seems to be #2, as it provides benefits now and optimizes SS.
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Old 01-05-2012, 03:49 PM   #8
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I am not an expert on SS, and thanks to the WEP, I will even be less of one when I am eligible, but I thought SS is ultimately revenue nuetral in the end ( in theory, I know, based on assumptions). So before one just waits to maximize the payout, OP might want make sure he has a level of assets the he is comfortable with. You can always take it early and sock the SS money away for " x" years to build up a cash cushion. If assets are plenty, then maybe maximizing and waiting is most beneficial.
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Old 01-05-2012, 08:41 PM   #9
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Hi bbohardt (and all!),

Been lurking here awhile but this is my first post. Yes, I'll introduce myself, but not tonight, it's late for me!!! I registered just to make this reply because there is an inaccurate assumption in the prior posts, so perhaps it's karma that got me off my duff.

I have a similar situation to yours and have checked into this as part of my planning. My wife and I both have time in education positions that are covered by pensions when not collecting SS, and in positions that are covered by SS. Not that we planned it, but IMHO it is really an inefficient way to prep for retirement, because the two half benefits don't equal a whole, and then you get penalized by WEP/GPO.

At any rate... what you are missing is that your widow SS benefit reduced by GPO only depends on whether you are eligible for a pension, not on whether you are collecting it. You can't collect a higher SS benefit early on by delaying the pension. Also, your primary widow benefit is not reduced by WEP (that was just for your spouse), but is reduced by collecting early. So the good news is you start with unreduced SS widow benefit, but the bad news is it gets hit by any non SS covered pension with GPO. While WEP has a maximum amount of reduction which can be eliminated if you have 30 years of SS substantial earnings, GPO has the potential to totally eliminate the SS benefit no matter how many years of SS you have, if your pension is large enough. I am close to 30 years of SS, but in one scenario if the chips fell bad, I could end up not being eligible for much, possibly nothing, from my wife's 20ish years of SS. It's complicated and very situation specific, so you really should get into the details and see how things shake out for you.

I suggest you do a search on the boglehead forum, where there is some great SS specific data. One of the posters there is sscritic, and I found some great info which I verified on the SS site.

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Old 01-05-2012, 09:03 PM   #10
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Originally Posted by oldphd View Post
You can't collect a higher SS benefit early on by delaying the pension.
I don't see where anyone suggested delaying the pension to take ss early (thinking he will not be penalized). The suggestions were to take the pension early and possibly delay ss to increase the benefit since it is penalized quite severely.
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Old 01-05-2012, 09:26 PM   #11
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Quote:
Originally Posted by Lakedog
The OP said WEP but looks like he meant GPO since he had the reduction correct (2/3 of his pension amount will be subtracted from the ss benefit).

If the $1440 is the ss amount before GPO reduction of $1267 (2/3 of $1900), you won't receive much ss (less than $200 a month) unless you delay taking it. If you need the income, looks like maybe taking the pension at age 60 and delaying ss might be the way to go.
I have to agree, I just couldnt make myself grasp how severe the GPO is. You really have no option, but to wait as sub $200 isnt much. Of course if OP has a COLA pension, the problem continues on. Not a very pleasant choice of options to have to deal with.
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Old 01-06-2012, 12:21 AM   #12
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Originally Posted by Lakedog View Post
I don't see where anyone suggested delaying the pension to take ss early (thinking he will not be penalized). The suggestions were to take the pension early and possibly delay ss to increase the benefit since it is penalized quite severely.
OP did in the initial post.
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Old 01-07-2012, 03:27 PM   #13
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http://policy.ssa.gov/poms.nsf/lnx/0202608100 You must be receiving the pension that was not covered under social security for GPO to apply. See GPO Applicability.
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Old 01-07-2012, 03:48 PM   #14
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DW is age 63. I am 67. Last year we both began receiving SS$ from HER SS account. Since she was covered by GPO her amount was reduced. My amount (as spouse) was not reduced.

When we refile under my SS# in 3 years, I believe that her spousal amount will also be reduced.
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Old 01-08-2012, 04:40 PM   #15
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Originally Posted by Dreamer View Post
http://policy.ssa.gov/poms.nsf/lnx/0202608100 You must be receiving the pension that was not covered under social security for GPO to apply. See GPO Applicability.
Aack, this appears to render my previous statement incorrect

I looked into this several months back when planning for different scenarios (ie both live forever, one passes away tomorrow, other passes away tomorrow, etc.). I was looking at both WEP and GPO, since we are both affected by both provisions. I came away with the understanding that both WEP and GPO reductions were determined by whether you COULD be collecting, not whether you WERE collecting. I just did a quick look and didn't find the info I recalled.

I have the potential of being in the same position as the OP, so I'm certainly interested in knowing the right answer.

I think we can agree that the SS/WEP/GPO falls in the category of things that are (unnecessarily?) complicated.

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Old 01-08-2012, 05:51 PM   #16
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Guess I'm still confused, but my understanding is that entitled as used here doesn't require that you be collecting the pension. My bolding in the body of the info below.

My thought is that the OP should research this with SS prior to making any definite decision.

SSA Handbook § 408


408. When will you NOT receive widow(er)'s insurance benefits?

Widow(er)'s insurance benefits may not be payable for some months if any of the conditions below apply:
  1. You are under full retirement age (as defined in 723.5), working, and earning more than the annual exempt amount (see §1803);
  2. You are under full retirement age and working outside the United States (U.S.) for more than 45 hours in a month (see §1823);
  3. You are an alien who is outside the U.S. for more than six full calendar months in a row and you do not meet an exception to the alien nonpayment provisions or do not meet the additional U.S. residency requirements for dependents and survivors. (see §1843-1846). For information on payments while you are outside the U.S., see “Your Payments While You Are Outside the United States” at www.socialsecurity.gov/pubs/10137.html and the Payment Abroad Screening Tool at www.ssa.gov/international/payments_outsideUS.html;
  4. You are in a U.S. Treasury restricted country where we cannot send U.S. Government payments (see §1847-1849). For information on payments while you are outside the U.S., see “Your Payments While You Are Outside the United States” at www.socialsecurity.gov/pubs/10137.html;
  5. You are in an SSA restricted country and do not meet an exception (see §1847-1849). For information on payments while you are outside the U.S., see “Your Payments While You Are Outside the United States” at www.socialsecurity.gov/pubs/10137.html;
  6. You are an alien who is outside the U.S., and you were deported;
  7. You are entitled to a government pension (Federal, State, or a political subdivision of a State not covered by Social Security) based of your own employment and:
    1. The entitlement requires offset against the Social Security payment; and
    2. The exceptions in §1836 do not apply;
  8. You are confined within the U.S. to a correctional institution for more than 30 continuous days, as a result of a conviction of a criminal offense or a court of competent jurisdiction issues a verdict, finding or a ruling that declares you are:
    • guilty, but insane with respect to a criminal offense;
    • not guilty of such a criminal offense by reason of insanity;
    • incompetent to stand trial under an allegation of a criminal offense;
    • determined to have a similar verdict or finding with respect to a criminal offense based on similar factors (such as mental disease, mental defect or mental incompetence) and
    you are confined to an institution at public expense for more than 30 continuous days;
    or
    Immediately upon completion of confinement in a correctional institution (confinement in the correctional institution was based on a crime; an element of which was sexual activity), you are confined by court order to an institution for more than 30 continuous days, at public expense because you were determined to be a sexually dangerous person or a sexual predator or similar finding (see §1850.1- 1850.3).
    You have an unsatisfied Federal, State or international law enforcement warrant for more than 30 continuous days for a crime, or attempted crime, of flight to avoid prosecution or confinement, escape from custody and flight-escape. In most jurisdictions these crimes are felonies or, in jurisdictions that do not classify crimes as felonies, a crime that is punishable by death or imprisonment for more than one year (regardless of the actual sentence imposed.
  9. You do not have a Social Security Number, and you refuse to apply for one; or
  10. You are in the U.S., and you are neither a U.S. citizen nor an alien lawfully present.
The conditions regarding nonpayment of benefits are explained in more detail in Chapter 18.
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