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Old 05-22-2009, 11:37 AM   #41
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On the other hand, if this person worked 10, 15, maybe 20 years paying a fairly high level of SS taxes and THEN went to work for an SS-exempt employer with a pension plan for another 25 years or so, they'd probably lose most of their SS benefit (I think the WEP in this case could reduce their SS to 40% of what it would have been). That's where I think the law is a bit flawed. If someone paid enough into SS after 20 years to be eligible for (say) $800 a month even if they never worked another day in their life, I don't think that should be dropped to $320 because they went to work for (say) a public school for another 20 instead of not working at all. I don't see how it's fair that someone who may have paid into SS for 10-20 years gets less SS benefit than someone who never paid a cent in SS taxes on their own work record.
This is exactly the reasoning behind the proposition. Another example, a man works for 15 years paying into the SS system then gets a teaching job for 20 years and pays into the STRS (teacher's retirement) system. When he divorces his nonworking wife at age 60, she cannot collect on his STRS retirement; it's forbidden by law. And because he cannot collect SS, she cannot collect the spousal benefit either. She is scr*wed and has to receive whatever pitiful alimony she can get.

Now I don't want to read replies about how she should have worked all those years and created her own retirement fund. In my example, she did work, raising kids, and taking care of her family. In an ideal world she would have also been a professional and, hopefully, most young women will see that now they need to depend only on themselves for retirement.
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Old 05-22-2009, 08:49 PM   #42
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This is exactly the reasoning behind the proposition. ...
I generally tend to stay out of SS discussions. I find it frustrating to try to make sense out of, or debate the details of a program that makes no sense to begin with (IMO).

The first step in solving any problem is to identify the problem. As far as I can tell (like many/most govt programs), that first step has not been done with SS. So subsequent steps are built on a shaky, or non-existent foundation. As Yogi Berra said, "If you don't know where you're going, you probably won't get there".

For example - is SS a "safety net" for those that were unable to save for retirement? OK, I think safety nets are important, so I can accept that, and I'm OK with some of my tax dollars going to "safety nets". But then, why the heck would SS pay higher benefits the more you work/earn (regressive as it is))? Shouldn't it be just the opposite?

I guess I just lose interest in the details, until someone can explain what it is we are talking about - but that's just me.

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Old 05-22-2009, 09:06 PM   #43
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This is exactly the reasoning behind the proposition. Another example, a man works for 15 years paying into the SS system then gets a teaching job for 20 years and pays into the STRS (teacher's retirement) system. When he divorces his nonworking wife at age 60, she cannot collect on his STRS retirement; it's forbidden by law. And because he cannot collect SS, she cannot collect the spousal benefit either. She is scr*wed and has to receive whatever pitiful alimony she can get.
You seem to have the cause of the problem reversed. SS is not to blame here, STRS is. STRS is specifically written to exclude the woman you refer to hypothetically from collecting a pension based on her ex's service.

STRS should be eliminated. All STRS members should be switched to SS. This would both eliminate dreadful situations such as the one you describe and would also be beneficial for the SS system. Winners all around!!

edit: Additionally, the hypothetical man in your example definitely could collect SS based on his 15 yrs of SS participation and his ex wife could collect a spousal benefit also based on those same years. This is explained on the SS web site under WEP.
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Old 05-22-2009, 09:37 PM   #44
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On the other hand, if this person worked 10, 15, maybe 20 years paying a fairly high level of SS taxes and THEN went to work for an SS-exempt employer with a pension plan for another 25 years or so, they'd probably lose most of their SS benefit (I think the WEP in this case could reduce their SS to 40% of what it would have been). That's where I think the law is a bit flawed. .
Doesn't work that way Zig. Refer to the SS site. With 20 years of substantial earnings under SS, the WEP reduction would be minimal. With 25 years, the reduction would be zero.
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Old 05-22-2009, 11:24 PM   #45
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How about making it fair for every working american man and woman by abolishing the government pension and benefits. Pay everyone the same amount of SS payment based on the number of years worked.

Why do government get full pay after 20 years of service and private workers don't?

I believe in equal pay for equal work.
How about the UAW deal - make unsustainable comitments and when its time to pay out have Obama write you a billion dollar bailout check and give you 40% of a car company out of bankruptsy.
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Old 05-23-2009, 11:06 AM   #46
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edit: Additionally, the hypothetical man in your example definitely could collect SS based on his 15 yrs of SS participation and his ex wife could collect a spousal benefit also based on those same years. This is explained on the SS web site under WEP.
Yes, he COULD but wouldn't because his STRS is much more lucrative and given a choice self interest wills out.
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Old 05-23-2009, 12:34 PM   #47
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Doesn't work that way Zig. Refer to the SS site. With 20 years of substantial earnings under SS, the WEP reduction would be minimal. With 25 years, the reduction would be zero.
I did. Here's the link to WEP:

Windfall Elimination Provision

This seems to show that the reduction for someone with 25 years of "substantial" earnings for SS purposes is as much as 35% of their benefit. Anyone with 20 years or less of "substantial" earnings subject to SS taxes can lose up to 60%.

One clarification is that someone with a small pension (per this site) won't lose more than 50% of their pension amount because of a "relatively low" pension (i.e. with $1000 a month pension, you can't lose more than $500 a month). That's still a pretty big hit to a small pensioner and could result in them getting less in SS benefit than someone who never paid a cent in SS taxes on their own work, at least as I interpret this.

If I've misinterpreted something, consider this your chance to educate me in specifics that you haven't shared yet.

To clarify, it's not the fact that pensioners lose some SS that isn't fair -- it's that they can apparently get less than people who never paid a cent in SS taxes, at least if I read it correctly.

[Edit to add: It's also ridiculous that SSA considers "substantial" earnings for this purpose to be nearly $20,000 a year in 2009. It's easily possible to be employed full-time for an entire year in a job subject to SS tax and not be credited with a year of earnings for this test. Heck, my wife will fail this test in her new gig, even if she DID pay SS tax.]
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Old 05-24-2009, 06:32 AM   #48
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Yes, he COULD but wouldn't because his STRS is much more lucrative and given a choice self interest wills out.
He doesn't have to chose, he's eligible to collect both.

STRS has a real problem in that it was intentionally designed, as you describe it, to NOT pay a spousal benefit to an ex-spouse. Surprising since so many teachers are women, the common victim of this sort of thing.

I'm not pro WEP or GPO by any means. Elimanating GPO would mean an extra approx $10K/YR income at our house. But I do see exaggerations of the impact of WEP being widely circulated.
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Old 05-24-2009, 06:56 AM   #49
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I did. Here's the link to WEP:

Windfall Elimination Provision

This seems to show that the reduction for someone with 25 years of "substantial" earnings for SS purposes is as much as 35% of their benefit. Anyone with 20 years or less of "substantial" earnings subject to SS taxes can lose up to 60%.
You're right Zig, the zero WEP reduction hits at 30 yrs, not the 25 yrs I recalled. However, at 25 yrs the max reduction is $186/mo or 50% of your SS whichever is greater. $186 is likely to be less than the 35% you estimated of a SS benefit based on 25 yrs of substantial earnings.

My point Zig is simply that participants of state govt pensions, which exempt them from SS, seem to NOT want to join SS. The state pensions are much, much more lucarative because they don't subsidize low wage earners at the expense of higher wage earners like SS does. The WEP package simply removes some of the low income subsidization from the benefit state employees who have some SS credit receive. Amazingly, the state pension recipients want to receive the low income SS subsidy despite not being low income. It would be sweet deal I guess.

The real FAIR situation would be to subject ALL citizens to FICA taxation. If states keep their systems, fine, but the participants still pay into SS and then collect SS without WEP or GPO which would them be unnecessary.
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Old 05-24-2009, 09:01 AM   #50
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I'll provide an example with real math later, but I've done some quick figuring that shows that someone who spends 20 years in the private sector and 20 years in the public sector, earning a constant $30,000 real salary for all 40 years, winds up getting screwed considerably more than someone paying into SS for 40 years AND someone getting the pension for 40 years.

As for whether everyone should be under SS, I suppose they probably should. That's one way to change the WEP/GPO thing, but I also suspect many of the public employees unions and their lobbies (especially the teachers) are too powerful in Washington.

One alternative would be to simply exempt the first (say) $1000 a month from being offset at all, and the existing WEP/GPO only applies to reduce SS based on pension income exceeding $1000 a month. That would provide at least a little relief for the folks who aren't high earners and split their careers between public sector and private sector.

Also, your comment about state pensions being "more lucrative" because lower incomes aren't subsidized only applies to higher-paid workers. If you aren't a higher-paid worker, it works against you -- another reason, IMO, not to be punitive to those with small pensions.
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Old 05-26-2009, 02:51 PM   #51
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No I'm not rich.... the other guy over there is!.. tax him.... take his money... but leave me alone! I am the "little guy" here... Sound familiar.... it should...
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Old 05-26-2009, 03:36 PM   #52
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Yes, he COULD but wouldn't because his STRS is much more lucrative and given a choice self interest wills out.
Were does this hypothetical creep live? And could you include a photo?

Ha
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Old 05-26-2009, 03:41 PM   #53
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Amazingly, the state pension recipients want to receive the low income SS subsidy despite not being low income. It would be sweet deal I guess.
Hey, self interest pays no part in this! Government workers are entirely selfless, and thus solely motvated by altruism and concern for the common weal.

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