Anyone Married to a teacher w/Pension? Have a SS Question

[imoldernu]

I think the situation is dependent on the state pension fund. Illinois has 18 different local agreements, but all fall under the same umbrella.
Overall, the teachers' pensions are generally better than SS.

That said... In Illinois, the Teachers' Pensions are underfunded by 90+ Billion dollars. In Wisconsin, the underfunding amount is about 10 Billion. Therein lies the risk factor.

 

[martyb]

The newer federal employees all pay into social security now. They receive a less generous civil service pension , a full social security pension and their TSP savings which are matched up to 5% , I think.

Old time employees are still under CSRS , ( fast becoming extinct) they did not pay into social security, and receive a larger pension, no matching to the TSP account.

I fall into the old CSRS category. Just retired 3 1/2 months ago. Although the WEP claims most of my SS(when I file in 5 yrs), I will get a small amount, around $250 or so at age 62. That's because I earned my 40 quarters before going to work for the feds under CSRS. I also paid at least a small amount into SS during the 28 years I was in the military reserves. While not paying enough during those years for any of them to be considered "substantial earnings" by the SSA, maybe it'll count for something...or not. I don't know. But, at least I'll get the $250, which might help with medicare premiums when the time comes. Every little bit helps....

 

[Telly]

Since my wife is a union teacher who will have a pension in a couple of years upon retirement she will receive ZERO of my SS upon my death. Zilch, nada, nuthin.

Have you carefully worked this through yourself as per the SSA website using all rules of GPO?

 

[clifp]

My young wife is a teacher who has not paid into social security and so will receive nothing on her own account and, as a consequence of the GPO, will receive no survivor benefit if I predecease her. The effect on our planning is that I will take SS at 62 to minimize the draw on our nest egg, so that it may be preserved for her use after I die. I also have a paid up whole life insurance policy, which, if annuitized or taken lump sum and properly invested, should make up for the loss of SS income.

Generally, my advice is to wait until 70 for most people to take SS. Actuarially it is wash at what ever age you get the same amount of money. However, waiting to take SS until 70 is the cheapest longevity insurance out there. In your case that is of secondary importance to preserve the nest egg for the wife.

Gumby is pretty smart guy I'd take his advice. I imagine he has done a pretty thorough analysis (although Whole life?)..

 

[seraphim]

I'm assuming you have the resources to wait until you're 70, should you live that long. That's the key - how long you expect to live, barring no accidents. Take it early and invest it as padding for your spouse after you pass?

+1 on Gumbys advice...


Sent from my iPad using Early Retirement Forum

 

[rothlev]

Some teachers have paid into SS. It is the decision of the individual state or government entity.

This article explains what is happening and why

A Social Security Lesson for Teachers by Tom Margenau on Creators.com - A Syndicate Of Talent

Understanding why and fairness are two different issues. On the flip side should my husband predecease me I will receive 100% of my social security, 100% of my pension and about 55% of his pension. The three pensions are separate entities and having one does not preclude me from the other.

GPO is unfair to many and does drive widowed teachers into poverty at times.

By the way, I am a retired teacher who paid into social security. My DH is a retired civil servant who did not. He is hit with GPO , and WEP which , althou I understand, I do not think totally fair. In our situation neither of us is reduced to one small pension upon death of the other. So, no big deal. Should I predecease him he actually gets a 10% raise in his pension for not needing the survivor clause any more.

 

[rothlev]

NEA - Stories from real people hurt by GPO, WEP

some stories of affected teachers.
The key as Cheesehead knows is planning in advance so as to minimize financial hardship down the road.

 

[Tadpole]

I never understand the thinking unless it comes from lack of expertise in the SS system. My husband and I both paid into SS for over 40 years. As the higher earner I will also lose 100% of his SS if he predeceases me. Why should a spouse with a non-SS pension (no contribution) get a better deal than a spouse who did pay in?

 

[rothlev]

I never understand the thinking unless it comes from lack of expertise in the SS system. My husband and I both paid into SS for over 40 years. As the higher earner I will also lose 100% of his SS if he predeceases me. Why should a spouse with a non-SS pension (no contribution) get a better deal than a spouse who did pay in?

Social security pensions and government pensions are not one and the same. Taking away an accured pension is controversial at best. In your example no law is taking away your own personal accured pension. WEP does exactly that.

Some fortunate people do earn more than one pension. Should we then take social security away from high income retireres just because they have other sources of income. ?

"? Why should a spouse with a non-SS pension get a better deal?"

not so, just getting the same deal as every other widow or widower.

Just saying there are two sides to the issue. A very controversial law.

 

[MikeWillRetire]

I sort of understand that a teacher who didn't pay into SS shouldn't get SS benefits. But aren't housewives entitled to a benefit equal to 50% of their husband's benefit?

 

[rothlev]

I sort of understand that a teacher who didn't pay into SS shouldn't get SS benefits. But aren't housewives entitled to a benefit equal to 50% of their husband's benefit?

Yes, therin lies the unfairness issue. Everyone is entitled to either their own benefit or 50% of the spouses benefit whichever is higher. EXCEPT when GPO takes that benefit away.

 

[Tadpole]

rothlev, No WEP doesn't do that. It simply attempts to place wage cohorts on the same bend point. But that was not the subject of my comment which still stands in the GPO discussion. In the GPO discussion my comment is the relevant one.

Mike, Yes, you have hit on the big winner in SS if ROI is the basis. It's a legacy of the days when women didn't work and lived longer than their spouses. In today's world where wives of high earners can most afford to stay at home, I wonder though.

This might help:

http://www.brookings.edu/~/media/research/files/opinions/2003/11/03saving%20diamond/20031103.pdf

 

[photoguy]

Generally, my advice is to wait until 70 for most people to take SS. Actuarially it is wash at what ever age you get the same amount of money. However, waiting to take SS until 70 is the cheapest longevity insurance out there.

I agree and think that the default position should be SS at 70 unless there are other circumstances that would push one to taking earlier SS.

Although SS is designed to be actuarially a wash even taking into account simple factors like race and gender suggest that some groups (especially asian and hispanic females who have the longest life expectancies) should delay.

 

[Mulligan]

NEA - Stories from real people hurt by GPO, WEP

some stories of affected teachers.
The key as Cheesehead knows is planning in advance so as to minimize financial hardship down the road.

Speaking of planning. I knew several teachers hired pre late 1980s who opted out of joining into Medicare (now it's mandatory). They were shocked to know they would have to pay the entire premium now since they do not have enough quarters. Let's see, you don't pay into it, and now you thought you would get it?


Sent from my iPad using Tapatalk

 

[Ally]

Speaking of planning. I knew several teachers hired pre late 1980s who opted out of joining into Medicare (now it's mandatory). They were shocked to know they would have to pay the entire premium now since they do not have enough quarters. Let's see, you don't pay into it, and now you thought you would get it?


Sent from my iPad using Tapatalk

My husband worked for a university and his pension is from the teacher retirement system. However, at the university, he paid into social security as well as teacher retirement, and will receive both. When we attended a pre-retirement information session, I was surprised to see many of the teachers present hadn't realized they weren't going to also get social security. In fact, they were angry that the university employees would get it. The session leader tried to explain that teachers had voted not to participate in SS in the 1950's. It was a very heated meeting. I couldn't understand how they couldn't have known this in making their future plans.


Sent from my iPad using Early Retirement Forum

 

[Mulligan]

My husband worked for a university and his pension is from the teacher retirement system. However, at the university, he paid into social security as well as teacher retirement, and will receive both. When we attended a pre-retirement information session, I was surprised to see many of the teachers present hadn't realized they weren't going to also get social security. In fact, they were angry that the university employees would get it. The session leader tried to explain that teachers had voted not to participate in SS in the 1950's. It was a very heated meeting. I couldn't understand how they couldn't have known this in making their future plans.


Sent from my iPad using Early Retirement Forum

Though it is probably no different than any other subset, I have seen in teachers some of the most frugal conscientious investors and on the opposite end some of the dumbest that boggles the mind. How do you expect to get something you don't pay into? What is worse some of them can go 30 years and never know what was even deducted from their check even though there is a statement given every month. No wonder companies like to stick hidden fees into bills, they know most won't even bother to notice.


Sent from my iPad using Tapatalk

 

[Chuckanut]

There are two problems here as far as I can see, both based upon people not know the facts about how things work:

1. People who don't participate in SS, and for whatever reason, don't realize that means they won't be eligible for benefits, even spousal benefits in their retirement years. That should be made clear up front and reinforced yearly so that they can prepare for it.

2. People who don't realize that not having to pay SS is as benefit in and of itself. Call it the didn't have to pay SS benefit. In effect, to get the didn't have to pay SS benefit, they traded away their right to the surviving spouse benefit. From the article:

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.

Think about it. The author is right. Without the GPO/WEP laws, the person who did not pay SS would get two SS benefits; the didn't pay SS benefit and the SS spousal benefit. Meanwhile people who did pay SS would either get there own SS benefit or the SS spousal benefit, whichever is higher. But, they only get one SS benefit.

There's also this:

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.

Clear as mud, right?

Note: FWIW, I am a former career teacher and believe teacher's have some legitimate grips in terms of compensation, but this is not one of them. In regards to retirement, teacher's would be better off working on things like 403B plans with outrageous fees, and poor performing managed funds. Those are the true ripoffs, IMHO.

 

[rothlev]

I never understand the thinking unless it comes from lack of expertise in the SS system. My husband and I both paid into SS for over 40 years. As the higher earner I will also lose 100% of his SS if he predeceases me. Why should a spouse with a non-SS pension (no contribution) get a better deal than a spouse who did pay in?

WEP is a reduction ( up to 50% ) in benefits accured, I stand corrected.
GPO often eliminates elgiblity for benefits completely.


What don't you understand about the thinking? That there are two sides to this issue, ? , I do know that there are knowledgeable people with expertise on both sides. I have plenty of expertise in how the SS system works as least as far as GPO and WEP go. I can see quite clearly both sides of the argument.

 

[Chuckanut]

NEA - Stories from real people hurt by GPO, WEP

I read these stories. While I am sad for those who are suffering financially, they really are asking to get a better deal than those couples where both paid into SS. That's simply not fair.

 

[rothlev]

Think about it. The author is right. Without the GPO/WEP laws, the person who did not pay SS would get two SS benefits; the didn't pay SS benefit and the SS spousal benefit. Meanwhile people who did pay SS would either get there own SS benefit or the SS spousal benefit, whichever is higher. But, they only get one SS benefit.

Re: didn't pay SS benefit?

WEP reduces the amount of a social security benefit that is accured. If a person did not work under social security then there is no social security benefit to reduce. You have to have earned a social security pension in the first place.

GPO affects people who have not accured a social security pension in their own name. but would have been eligible for the same spousal benefit as say a non working spouse.

In no case does anyone get two benefits. In any event social security has many loopholes and eligiblity rules that may or may not be fair. (ie) retirees that support minor children and get SS for them

 

[martyb]

I fall into the category of people who paid into SS early on in life, enough to qualify for benefits, but then through the rest of my career, either didn't pay into the system anymore beyond basically qualifying, or else did pay into the system, but didn't pay enough to receive credit for those years. I earned my 40 "quarters) from high school through my active military years, and then went to work for the federal govt. under CSRS, where no SS was withheld from my paychecks. However, for all the years I was a reservist, SS WAS withheld from my military paychecks. Apparently though, the amount withheld didn't reach the magic threshold to quality as "substantial" earnings. So....I did pay a smaller amount into SS for nearly 28 years as a reservist, while simultaneously working as a fed employee. Total of 37 1/2 yr career. The only SS credits I have though, are the ones I earned from 1973 through 1981. Thus, my SS check at age 62 is calculated to be around $250 per month. I'll take it.

 

[RetireAge50]

I would take the never pay social security never get social security deal every time. Sounds great.


Sent from my iPhone using Early Retirement Forum

 

[Chuckanut]

In no case does anyone get two benefits. In any event social security has many loopholes and eligiblity rules that may or may not be fair. (ie) retirees that support minor children and get SS for them

The person who did not pay into SS would get two benefits.

One would be a bigger pension since he/she and the employer put what would have been SS dollars into the pension fund to beef it up. I think that is what many people are overlooking. By not having to pay SS, the person should be getting a bigger pension since more $$'s are put into it. If the money not paid to SS was not put into the pension plan, then that person got to keep anywhere from 4-6% more of their pay than the person who did pay into SS. Either way the non SS payer benefits: Either with a bigger pension payment, or by keeping more of their paycheck.

The second benefit would be the survivor benefit.

However, I doubt we will see eye to eye on this so...

I think we will have to agree to disagree.

 

[rothlev]

The person who did not pay into SS would get two benefits.

One would be a bigger pension since he/she and the employer put what would have been SS dollars into the pension fund to beef it up. I think that is what many people are overlooking. By not having to pay SS, the person should be getting a bigger pension since more $$'s are put into it. If the money not paid to SS was not put into the pension plan, then that person got to keep anywhere from 4-6% more of their pay than the person who did pay into SS. Either way the non SS payer benefits: Either with a bigger pension payment, or by keeping more of their paycheck.

The second benefit would be the survivor benefit.

However, I doubt we will see eye to eye on this so...

I think we will have to agree to disagree.

Actually, personally I do not have a huge problem with either WEP or GPO, we are affected by both. I am just compassionate and understanding of people who suffer financial hardship because of confusing and difficult to understand rules. Some states ie Texas comes to mind, pay low pensions, and teachers can get screwed. And I for one hate to see a teacher wind up in poverty after a long career.

 

[rothlev]

The person who did not pay into SS would get two benefits.

One would be a bigger pension since he/she and the employer put what would have been SS dollars into the pension fund to beef it up. I think that is what many people are overlooking. By not having to pay SS, the person should be getting a bigger pension since more $$'s are put into it. If the money not paid to SS was not put into the pension plan, then that person got to keep anywhere from 4-6% more of their pay than the person who did pay into SS. Either way the non SS payer benefits: Either with a bigger pension payment, or by keeping more of their paycheck.

The second benefit would be the survivor benefit.

However, I doubt we will see eye to eye on this so...




I think we will have to agree to disagree.

I get it you were talking about not paying the FICA SS tax. Sure that is a benefit.

But remember you not required to pay in to receive social security in many circumstances. Spousal, dependent children, non working homemaker, disabled etc...

and social security payouts due to the "bend" points have little to do with how much you paid in, it is after all an insurance program