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

[Cheesehead]

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.

I'm 61, she's 57, we plan to retire in a year or so. If I take my SS at 62 it will represent about 25-28% of our post retirement revenue. Presently I have a lot of term life insurance but that will expire when I am around 70 and there's no hope of renewal.

My question is: Shouldn't I grab as much SS as soon as possible because if I croak early there's no more SS income? If I wait until 66 then I would be getting an additional $7700 per year. If I wait until 70 I'd get an additional $7500 per year over taking it at 66.

Anyone in the same boat? Is life expectancy a factor when there is no survivorship benefit? Although I know about the pitfalls of an annuity I am wondering if that may be a good bridge in the event of my demise. We're considering a MassMutual RetireEase Choice Defered Income Annuity from Fidelity.

Thanks

 

[Chuckanut]

Cheese, don't you mean she will collect zero SS because she did not pay into the SS system? As far as I know teachers have the same rights and have to follow the same rules as anybody else.

That aside , you have a valid concern over when to take SS. There are many threads on this issue and many opinions of what is best. IMHO, the two most important questions are 1) when do you need the money, and 2) how long do you expect to live?

 

[Cheesehead]

No, because it's a government pension she is going to get 0 SS, it's an Illinois thing.

Since this is a unique situation none of the previous threads regarding SS relate.

My feeling is that I paid into the SS system and it would be a crying shame if I leave all that money on the table when I depart. Most people their spouse will get half, not us.

 

[haha]

If I wait until 66 then I would be getting an additional $7700 per year. If I wait until 70 I'd get an additional $7500 per year over taking it at 66.

These figures are not internally consistent.

Ha

 

[rothlev]

In your case you do not have any issues of maximizing your spouses surviver benefits from you social security account. There isn't one. So you just decide on whether you want more money later or less money sooner. Look at taxes, spending , budget, quality of life issues, leaving $ for inheritances, and make your best decision.
illinois teachers have a good pension with a COLA . They don't pay into and cannot receive social security pensions based on the teaching income. could do worse. I have a Florida teachers pension. MUCH less generous.

 

[Mulligan]

Any chance by delaying SS to 70, that the spousal benefit is high enough to where the GPO allows a portion to be collected by spouse? It invariably depends on how big the pension is vs. the original spousal benefit. You and wife are probably in a tough spot either way. I am affected by the evil twin sister of the GPO (the WEP).


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[34rlsa]

Cheese, I'm in the same boat... My wife is a teacher with a great pension. If I go she gets 0 SS.

We are retiring in less than 2 years @ 60.

Her pension plus my SS @ 62 exceeds our annual expenses.

From 60 to 62 we will need to withdrawal from our investments each year to maintain our current lifestyle. If I wait until 67 or 70 to take SS... sure we'll have quite a bit more income at that time but the additional withdraws for those additional 5 to 8 years will leave quite a bit less in our IRA and 403b. Should something happen to me... she would have less in investment income and no SS coming in.

 

[Chuckanut]

The way SS works for most Of us is that you have to pay into the program to get something out of it In your wife's case she got to keep the money she would have paid to SS, and got a better pension than most. The consequence of that is not being eligible for SS. In effect her survivor benefits are already in the money she kept and in her better pension benefits.

Personally, I would like to do away with the SS exemption for government jobs. That would eliminate these confusing and sometimes controversial dilemmas.

 

[steelyman]

Personally, I would like to do away with the SS exemption for government jobs. That would eliminate these confusing and sometimes controversial dilemmas.

You can't just "do away" with something that people who were hired 25 years ago (as I was) had no choice in.

 

[Chuckanut]

You can't just "do away" with something that people who were hired 25 years ago (as I was) had no choice in.

True. How about if it's phased out by not allowing any new people to not pay SS as of a certain date. Current folks would be grandfathered in. We'd have to allow time for new pension plans that would reflect this change - most likely defined contribution or hybrid plans. Many government plans are headed this way in any case

 

[steelyman]

True. How about if it's phased out by not allowing any new people to not pay SS as of a certain date. Current folks would be grandfathered in. We'd have to allow time for new pension plans that would reflect this change - most likely defined contribution or hybrid plans. Many government plans are headed this way in any case

Sure, that seems reasonable. The thing that many forget or don't know is that the employees paid in through their careers. Defined contribution is probably better in retrospect.

 

[Chuckanut]

I agree. People pay in many ways. And the pension is just one part of compensation. FWIW, maybe if all the facts were on the table, Cheese's wife should be able to collect survivor benefits. But, for now the rules are clear . Heck, even if a person has some SS earnings aren't their rules that would limit the payment In similar cases?

 

[rothlev]

I agree. People pay in many ways. And the pension is just one part of compensation. FWIW, maybe if all the facts were on the table, Cheese's wife should be able to collect survivor benefits. But, for now the rules are clear . Heck, even if a person has some SS earnings aren't their rules that would limit the payment In similar cases?

WEP - unless you have 30 years in social security earnings, you will see a hit on your own accured social security benefit up to about 50%.

 

[steelyman]

I agree. People pay in many ways. And the pension is just one part of compensation. FWIW, maybe if all the facts were on the table, Cheese's wife should be able to collect survivor benefits. But, for now the rules are clear . Heck, even if a person has some SS earnings aren't their rules that would limit the payment In similar cases?

There are. My mom was hit by them and I am personally counting on zero social security.

 

[rothlev]

True. How about if it's phased out by not allowing any new people to not pay SS as of a certain date. Current folks would be grandfathered in. We'd have to allow time for new pension plans that would reflect this change - most likely defined contribution or hybrid plans. Many government plans are headed this way in any case

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.

 

[bob boag]

I'm in the same boat - 58 with maxed out SS contributions for many years. California teaching wife is 54. She put a small amount into SS as an airline employee before becoming a teacher.

If the choice of SS starting age is normally revenue-neutral, and our teaching spouses are denied the survivor benefits, doesn't that imply that in our case we should take SS ASAP as Cheesehead implies?

 

[Bestwifeever]

Two spouses who have each earned full SS benefits are pretty common now--are they getting screwed out of survivor benefits when their spouses die?

To be fair imho Social Security should be structured like pensions with survivor benefit options, like most pensions have been.

I wonder if there are any class action suits against SS to recover benefits paid in that will never be awarded because of WEP and GPO.

 

[Cheesehead]

Ha,

What I meant is that if I wait until 66 I will get $ $7700 more per year than at age 62. And if I wait until age 70 I will get $7500 more per year than at age 66.

So my feeling is I should take it ASAP for two reasons:

• Conserve the nest egg.
• Don't give the government all my SS earnings if I die early.

 

[Cheesehead]

Any spouses of teachers who will receive no SS- Are you considering an annuity to make up for the loss of the 50% survivor benefit?

 

[34rlsa]

If the choice of SS starting age is normally revenue-neutral, and our teaching spouses are denied the survivor benefits, doesn't that imply that in our case we should take SS ASAP as Cheesehead implies?

I imagine no 2 situations are the same for couples when a teacher's pension is involved. But as I stated above... for us we believe it makes sense to take my SS at 62.

 

[34rlsa]

Any spouses of teachers who will receive no SS- Are you considering an annuity to make up for the loss of the 50% survivor benefit?

We didn't buy a separate annuity. But we did buy additional years of service to my wife's pension from qualified years at another school district.

 

[steelyman]

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.

That is/was true for IL state employees, at least those hired when I was (late 80s). No social security, no match, but you could deduct into a 457 (deferred compensation) plan.

 

[Gumby]

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.

 

[Chuckanut]

I imagine no 2 situations are the same for couples when a teacher's pension is involved. But as I stated above... for us we believe it makes sense to take my SS at 62.

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

Bob and Carol both worked all their lives. And they worked at jobs that were covered by Social Security. In other words, Social Security taxes were deducted from both their paychecks.


Neighbor Ted also worked at a job covered by Social Security. But his wife, Alice, was a teacher in Dallas. Texas teachers pay into a state teachers' retirement system, but they do not pay into Social Security.

Bob retired and is getting $1,200 per month in Social Security retirement benefits. Carol actually made a little more than Bob most of her life, so she's getting a Social Security retirement pension of about $1,500 per month. Carol can't get (and frankly, doesn't expect) any wife's benefits on Bob's record because her own Social Security benefit precludes any spousal payments. In other words, Carol's own retirement benefit offsets any wife's benefits she might have been due on her husband's record. And for that matter, Bob can't get a husband's benefit on Carol's record because his own retirement benefit would offset it.


Across the street, Ted is receiving roughly the same Social Security benefit as Bob, about $1,200 per month. His wife, Alice, is getting a $3,000 monthly Texas teacher's pension. Before the pension offset law was in place, Alice would have been eligible for a $600 dependent wife's benefit from Social Security in addition to her teacher's pension. But now, the government pension offset law prevents that from happening. 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.

 

[haha]

Ha,

What I meant is that if I wait until 66 I will get $ $7700 more per year than at age 62. And if I wait until age 70 I will get $7500 more per year than at age 66.

So my feeling is I should take it ASAP for two reasons:

• Conserve the nest egg.
• Don't give the government all my SS earnings if I die early.

Thank you. I misunderstood this, now it makes sense.

Not sure about your decision, it is complex in more ways than one. Good luck.

Ha