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Old 03-01-2014, 03:19 PM   #21
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I guess my implicit assumption was that we were talking about teachers retiring after 25 years or so of teaching. In any event, I was mostly trying to figure out why the OP had somehow been informed that it was a rule specifically in IL that retired teachers would never get survivor benefits. This seemed the most likely explanation for why people might say that.
It doesn't sound like OP researched WEP and GPO before asking the question here. Not knowing about the consequences of GPO or thinking GPO always totally eliminates the spousal SS benefit completely are common false rumors.

As you and I have discussed previously on this subject, Taking SS at 62 and investing it for the benefit of the spouse is one work around to try to offset GPO.
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Old 03-01-2014, 03:24 PM   #22
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WEP rules are there for a purpose. What is surprising to me is the number of people who did not pay into SS for decades and are now surprised that they can't collect it. It seems that many employers tactfully omit telling their employees that no SS taxes also means no SS benefits. Or, maybe these people gambled that SS would be broke so their contributions would be nothing but wasted money? I don't get it.
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Old 03-01-2014, 03:35 PM   #23
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WEP rules are there for a purpose.
The reasoning behind WEP makes some sense. GPO, however, makes no sense.
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What is surprising to me is the number of people who did not pay into SS for decades and are now surprised that they can't collect it.
That isn't exactly how it works. You may be confused concerning the differences between WEP and GPO. WEP does not impact a person who didn't work enough under SS to qualify for benefits. But under GPO, if a spouse doesn't work at all (stay at home mom, rich socialite wife, etc.), she/he gets 50% of the spouse's SS. If the spouse goes and works in a job not covered by SS but covered by another gov't pension, and two-thirds of that pension is as much as the spouses SS, they get no spousal SS. It's a strange rule which rewards non-workers over workers.
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It seems that many employers tactfully omit telling their employees that no SS taxes also means no SS benefits. Or, maybe these people gambled that SS would be broke so their contributions would be nothing but wasted money?
Again, if you don't work under SS at all, you are NOT impacted by WEP.
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I don't get it.
Many people are confused about WEP, GPO and not qualifying for SS. so don't feel too bad. The SS web site has a pretty good explanation which would likely help you out and takes only a few minutes to read. Check it out.

Many gov't employees in IL who are not covered by SS would like to have that situation changed. Despite the fact they would have to contribute their 6%, they've come to realize that they get the benefit of the employer's 6% match and that, for the dollars contributed, SS can be a pretty darn good deal. The local gov't bodies, however, are fighting it tooth and nail. They don't want to make the 6% employer contribution.
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Old 03-01-2014, 03:41 PM   #24
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WEP rules are there for a purpose.
The WEP, which reduces ones own SS when one has both SS and non-SS earnings, makes sense to me. It prevents people who were actually high income from collecting benefits on their own account as if they were lower income workers.

However, the GPO seems grossly unfair and rewards sloth. If my young wife had stayed at home all along eating chocolate bonbons and watching soaps (and not paying social security or any other tax), she would get a survivor benefit when I die. But since she was working all those years (and not paying social security, but was paying substantial federal income tax) she does not get a survivor benefit. It seems to me that, for these purposes, the social security system should be indifferent as to WHY she wasn't paying social security.
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Old 03-01-2014, 03:59 PM   #25
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1) "Knowing I won't live that long I said why don't we have me checking out at 72, we compromised at 82. I have many health issues (age 60) and the men in my family don't live that long but I agreed to humor him."

2) "Can you please further explain the logic of taking the SS at 62? I won't be drawing from the nest egg until 66 at the soonest.

And what if you do live a long life? Won't you regret taking it early?"

It seems that on one hand you are quite sure that you may only live to 72 or so but are also concerned that you might live longer. Trying to solve for both of these possibilities may make coming to a solution impossible. You may need to focus on the most likely or consider the suggested 5 years at a time approach.

If you believe #1 it seems you are better taking SS as soon as you can since waiting only benefits you for a short period of time. If you believe #2, seems like you may want to wait. Seems like the pension discussion is just noise and possibly moot.
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Old 03-01-2014, 07:06 PM   #26
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The WEP, which reduces ones own SS when one has both SS and non-SS earnings, makes sense to me. It prevents people who were actually high income from collecting benefits on their own account as if they were lower income workers.

However, the GPO seems grossly unfair and rewards sloth. If my young wife had stayed at home all along eating chocolate bonbons and watching soaps (and not paying social security or any other tax), she would get a survivor benefit when I die. But since she was working all those years (and not paying social security, but was paying substantial federal income tax) she does not get a survivor benefit. It seems to me that, for these purposes, the social security system should be indifferent as to WHY she wasn't paying social security.

I see your logic. The GPO undercuts the idea of SS as insurance, treating it more like a minimum income provision entitlement - really its a special case of means testing. Note that same spouse could have an annuity paying 100k a month or assets of 100MM and still get the spousal beneift.
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Old 03-01-2014, 07:32 PM   #27
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Well, you are paying a CFP, what advice did they offer about all this?
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Old 03-03-2014, 08:54 AM   #28
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No, not the GPO, but looking at your own SS to help you decide along with your anticipated savings rate if it's better to take SS at 62 or 70, or anywhere in between. We had originally assumed we would wait til 70, but the calculator showed us that it was better to take it at 62 and keep the assets we would have otherwise used for expenses fully invested. It simply takes more factors into consideration when determining what your highest benefit will be, and may give a clearer picture to the OP in making that determination for himself.

Now if only I could find something that takes taxes into consideration too!
We are in same situation also and will take early. The tax consideration is easy here in Indiana because they do not tax ss.
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Old 03-03-2014, 02:37 PM   #29
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We had always thought we were in very good shape for retirement with our three legged stool of Pension, Social Security and the Nest Egg making 3%. As usual the CFP projected my lifespan out to 92 as a worst case scenario in terms of longevity. Knowing I won't live that long I said why don't we have me checking out at 72, we compromised at 82. I have many health issues (age 60) and the men in my family don't live that long but I agreed to humor him.

Suddenly the projections didn't look so rosy! This new CFP was astute enough to know that my wife would NOT collect any of my SS because of her government pension so the graph took a plunge (at her age 67) like we have never seen before! Ugh! We never calculated that into our plans before since the calculator(s) always had me living to the unrealistic age of 92.
If I'm reading this correctly, you are still in good shape if you both live to 92. But, if you die at 82, then your wife has serious problems.

I'm having trouble figuring out why that would be. I can see that she won't get your SS after you die, but she will have all the remaining nest egg at 82. That was supposed to support two people for the 10 years from 82 to 92, but if you die at 82 it only needs to support one.

I guess the question is, Are you reducing her target spending after you die to some number like 2/3 of your combined target?
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Old 03-03-2014, 02:54 PM   #30
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And as fort he whole life policy- you had further foresight than I. For me I suppose it's too late to get one, especially with my pre-existing health conditions. I do have term for $600K but that expires when I am 70.
Have you checked your term policy for a conversion provision? Many term policies give the insured the right to convert to whole life regardless of health. The conversion provision often expires before the policy does, so you need to look at the contract carefully. The whole life policy won't be the company's best priced option, so you probably want to wait until the last year of the conversion period and consider your health at that time.
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Old 03-07-2014, 09:12 AM   #31
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OP here. Thanks everyone for your input. Sorry I disappeared for a few days but I was below deck on an aircraft carrier.

In Illinois the spouse with the pension from the Illinois Teachers Retirement (TRS) system gets ZERO, zilch, nada of the deceased spouse's social security. This comes from my CPA, my financial planner and the knowledgable advisor at the TRS, that's three experts in the IL Way Of Doing Things. So the point I was making is that when my life span projections went out to 92 with my SS of about $30K a year we looked AOK.

But if I die the income drops that $30K! That's about 1/3rd of the income stream even though there won't be my expenses. Had I the foresight I think I should have taken out an annuity years ago or gotten a whole life policy. There is no way my term policy will be affordable after the current one expires.

So as my original post inquired I was wondering what others in my position are doing? Does the wife with the pension go back to work at 74 years old to make up the shortfall? Why don't the FPs create scenarios for this instead of having the husband live until the unrealistic age of 92? It's my fault for not having thought about this previously and forcing them to have me croak earlier.

I did get one good piece of advice from the posters here: I will have my wife choose the option of getting her highest monthly payouts and I will take the minimal survivor benefit, and take my chances if she passes before I do. And if I meet any more young couples where the wife is a union teacher I will tell the husband to take out that annuity or whole life policy real early, perhaps in their 30s or 40s.
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Old 03-07-2014, 10:54 AM   #32
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DW and I are in the same boat as you. She has a teacher pension, I have an IMRF pension. We each will recieve half of the other's pension if one of us were to check out. I get SS, she does not. We plan to take my SS at 62, and invest it aggressively. (We will not require SS for daily expenses.) In this way we hope to build an additional nest egg for DW if I check out first. I have run Firecalc with all scenarios, and we appear to be financialy fine, although one of us will be sad, the other dead.
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