Government employees who are in the SS system

[RE2Boys]

No way I'll get close to 30 or even 20 years of "substantial service" for SS. I have 10 years. So...you're saying that all the years beyond the initial 10 that basically qualify me for SS but don't reach the "substantial' threshold will still count for something? I hope you're right, but that wasn't the way I've understood it to this point.

Yes, it does count for something. The more SS earnings, the higher your SS monthly pension, even if your subject to the WEP provisions.

I had 22 years under SS and another 25 as a federal civil servant not subject to SS. Got my federal pension. Maybe only had 5 years of "substantial" SS earnings, but every bit of the 22 years under SS went into the calculation in determining my SS pension. But as I was subject to WEP, they subtracted the $386 per month from the normal calculation to arrive at my social security pension. Started receiving $377 per month at age 63 in May 2013.

And my minor children (2) are each receiving $114 per month until they graduate HS.

See http://www.early-retirement.org/forums/f28/social-security-wep-reduction-63827.html
for further discussions on the WEP

 

[MissMolly]

NO, WEP only come into play when you get retirement income from wages that you didn't pay SS on.

Thanks!

 

[akck]

I don't think there's any way to really determine what I'll end up getting, then. I Can't tell whether the estimate I've seen takes those years into consideration, or only my 40 "quarters" that was pre-government service or what.

You can plug your numbers in here to get a WEP estimate:

Calculators: Online Calculator (WEP Version)

 

[Walt34]

I believe that SS participation is optional for the state, county, or municipality but not the individual employee. Although I did work for a county WEP won't affect me because I did contribute to SS for the 29 years I was there. Contributions to both were 7.5%, or 15% total. The estimator shows SS income will be $2300/month at FRA of 66.

There was some complaining (not by me!) about having to contribute to both but I'm sure those who did aren't complaining now.

 

[kyounge1956]

I worked a city government job for 28 years or so and paid into both the employee pension fund and Social Security, so my situation is pretty simple. My mother is a retired teacher and worked for at least one district that didn't pay into SS, and at least one that did, plus she qualifies for a widow's benefit. Between the fact that she didn't pay into SS for all the time she worked, adjustment for starting her benefits early, and then taking into account her eligibility as a widow, I would have no idea how to figure out the proper amount she should be getting.

 

[akck]

I worked a city government job for 28 years or so and paid into both the employee pension fund and Social Security, so my situation is pretty simple. My mother is a retired teacher and worked for at least one district that didn't pay into SS, and at least one that did, plus she qualifies for a widow's benefit. Between the fact that she didn't pay into SS for all the time she worked, adjustment for starting her benefits early, and then taking into account her eligibility as a widow, I would have no idea how to figure out the proper amount she should be getting.

Sounds like she faces both WEP and GPO.

 

[Fermion]

Yes, it does count for something. The more SS earnings, the higher your SS monthly pension, even if your subject to the WEP provisions.

I had 22 years under SS and another 25 as a federal civil servant not subject to SS. Got my federal pension. Maybe only had 5 years of "substantial" SS earnings, but every bit of the 22 years under SS went into the calculation in determining my SS pension. But as I was subject to WEP, they subtracted the $386 per month from the normal calculation to arrive at my social security pension. Started receiving $377 per month at age 63 in May 2013.

And my minor children (2) are each receiving $114 per month until they graduate HS.

See http://www.early-retirement.org/forums/f28/social-security-wep-reduction-63827.html
for further discussions on the WEP

You had kids at age 50

 

[akck]

I worked a city government job for 28 years or so and paid into both the employee pension fund and Social Security, so my situation is pretty simple. My mother is a retired teacher and worked for at least one district that didn't pay into SS, and at least one that did, plus she qualifies for a widow's benefit. Between the fact that she didn't pay into SS for all the time she worked, adjustment for starting her benefits early, and then taking into account her eligibility as a widow, I would have no idea how to figure out the proper amount she should be getting.

Your mother will be affected by both WEP and GPO. For her own SS benefit, you can enter her SS wages in the WEP calculator mentioned earlier. Her widow's benefit will be reduced by 2/3 of her non-SS pension due to GPO. She'll only get the higher of the two.

I'm not sure how it works, but she may be able to claim her widow's benefit first and then her own at age 70, assuming her own will be larger then. If not, then she can claim hers at 62 and widow's at full retirement.

 

[RE2Boys]

You had kids at age 50

Actually at 47 and 49. All the "life in retirement" discussions largely don't apply to me. I'm subject to their schedules, school, soccer, Scouts.

Just call me a soccer dad complete with minivan (actually two minivans)

 

[ESRwannabe]

I'm a government employee and I have a pension, social security, a 401k, a roth ira, and a taxable brokerage account. I've also purchased i-bonds before but don't have any right now.

I put 100% bonds in my 401k, 100% REITs in my Roth IRA, and stocks in my brokerage account.

I would also consider opening an annuity with Vanguard if I wanted to add more into tax inefficient assets like REITs.

 

[Amethyst]

Life happens - literally, it just does! I am well acquainted with a dad who had his first child at 47 and second at 51 (he's now a 64-year-old with teenagers);
another who had his 3rd at age 47;
and the most "extreme" dad, who had his first child at 40, and second child at 67. And is now 82, with a teenager.

All turned out to be good kids, too. Even the middle-mentioned one, who grew up to be me

Amethyst

You had kids at age 50

 

[kyounge1956]

Sounds like she faces both WEP and GPO.

Your mother will be affected by both WEP and GPO. For her own SS benefit, you can enter her SS wages in the WEP calculator mentioned earlier. Her widow's benefit will be reduced by 2/3 of her non-SS pension due to GPO. She'll only get the higher of the two.

I'm not even going to try--I have a problem of my own with obscure governmentally-mandated financial calculations. She lets the Social Security Administration figure it out. Whatever they deposit in her bank account, she considers hers to do with as she wishes.

I'm not sure how it works, but she may be able to claim her widow's benefit first and then her own at age 70, assuming her own will be larger then. If not, then she can claim hers at 62 and widow's at full retirement.

Both of those trains have already left the station. Mom will be turning 87 in about 6 weeks.

 

[NoiseBoy]

My first fulltime job was with a state university. IIRC when I was hired I had two retirement options, a state DB pension plan or a 401k, which I think was TIAA-CREF, but don't hold me to that as it was a long time ago! I picked the DB plan and I think the contribution rate was either 8% or 9%. I did not pay any Soc Sec. Interestingly, while working there as a student, I didn't pay any Soc Sec either.


I held that first civil service job long enough to be vested in the state's DB plan, and I have managed to leave that money alone, so I will receive a pension at 62 and therefore my Soc Sec benefit will be affected by the WEP provision. The link to the online WEP calculator that others have posted is very useful. I found it easier to understand than the results of the calculator that you can download. The main advantage to downloading the full calculator that I can see is that you can save your earnings history once you have keyed it all in whereas with the online WEP calculator you'll have to reenter it each time. For someone with an RE goal, it is very hard to accumulate 30 years of substantial earnings to completely avoid WEP.


With respect to the current situation regarding the funding levels for many government sponsored DB plans, I think it is helpful to know that many of the employees covered by these plans will not have any Soc Sec benefits so their pensions are their only retirement income (beyond personal savings of course.)

 

[Nodak]

I had my 40 quarters in for SS before I hired into the CSRS. I get a nice pension from CSRS and I draw some SS. However because of the windfall profits law my SS is greatly reduced. Without the WEP my SS would be about $750 with the WEP it is $495.

 

[Khan]

I switched from CSRS to FERS in 1984; also had some SSA from earlier jobs. Am no getting SS and also pension from CSRS and FERS.

 

[Gunny]

As a FED employee under FERS, I had no choice but participate in SS. However, when I retire at 56 SS will will pay me half of my age 62 SS benefit until I reach age 62. I can then elect to continue receiving SS benefits at the 62 age rate or defer to a later age. I still would have rather been able to keep my 7% and invested it myself.

 

[Tom52]

As a FED employee under FERS, I had no choice but participate in SS. However, when I retire at 56 SS will will pay me half of my age 62 SS benefit until I reach age 62. I can then elect to continue receiving SS benefits at the 62 age rate or defer to a later age. I still would have rather been able to keep my 7% and invested it myself.

That is a new one to me, I didn't think you could collect any SS prior to age 62.

 

[F4mandolin]

gunnychapman- I am just in the process of getting the money from 56 to 62 as well (3 months late at this point). It is not a SS program however. It is a FERS annuity that is based on SS earnings while you were working for the Govt. I know there are a lot of people who would rather have had the money to invest themselves.....but that is the problem. MOST people don't have the discipline to invest wisely and keep their fingers off the money. The SS system is there so that they WILL have at least some money coming in whether they are foolish with their money or not.

 

[ABQ2015]

My older sister started working for the State of Louisiana in the mid-1960s and did not have to pay into social security. She worked there for 40 years and given her low wages and lack of interest in investing, it might have been better for her retirement if she had paid into social security. But she died at age 60 so is a moot point.I began working for the federal government in 1985 so was under FERS and had to pay social security. Would have preferred to be under the previous CSRS system where the pension is twice as much but you do not pay into or receive social security. The difference between the larger CSRS pension and what I will get under social security is about $20K a year.

 

[Gunny]

That is a new one to me, I didn't think you could collect any SS prior to age 62.

Actually it is not a SS payment but a FERS supplement based on 50 percent of one's SS benefit at 62. Didn't mean to confuse.

 

[F4mandolin]

gunny.....still not quite right. Hard to figure out.....my estimate at 62 is $1334, hoping to get 700-800 a month once they get done getting their butts in gear. Just type into Google FERS supplement and you can get the REAL details and can figure out the approx payouts. Hope you aren't just taking other people's opinions for this like FOX news.....do the research.

 

[ABQ2015]

The FERS supplement is prorated based on years of creditable service. Divide years of federal service (does not include sick leave applied to service years) by 40 and multiply by expected SS at age 62. So if your years of service at retirement is 30 and your expected SS at age 62 is $1000 a month, your supplement would be $750 a month. There is also a rather complicated formula hidden away in some retirement handbook but this formula is a good estimate.

 

[jazz4cash]

The FERS supplement is prorated based on years of creditable service. Divide years of federal service (does not include sick leave applied to service years) by 40 and multiply by expected SS at age 62. So if your years of service at retirement is 30 and your expected SS at age 62 is $1000 a month, your supplement would be $750 a month. There is also a rather complicated formula hidden away in some retirement handbook but this formula is a good estimate.

If you get the FERS supplement, does it affect your FERS annuity amount once you reach age 62? I am looking into this for DW who is FERS. Mega-corp had a similar benefit which reduced the final pension payment, which seems fair. Otherwise it's just free money. The final pension reduction was not a huge amount.

 

[ABQ2015]

If you get the FERS supplement, does it affect your FERS annuity amount once you reach age 62? I am looking into this for DW who is FERS. Mega-corp had a similar benefit which reduced the final pension payment, which seems fair. Otherwise it's just free money. The final pension reduction was not a huge amount.

No, the FERS supplement has no effect on the FERS pension payment. The supplement is "free money" if you want to call it that.

Under the older federal retirement plan, CSRS, feds do not get social security but their pension annuity is twice as large as the FERS pension. As FERS retirees do not have the larger annuity of CSRS, social security is a more substantial part of their retirement (e.g., they describe it as a 3 legged stool with the FERS annuity, social security, and a 401K called TSP). FERS feds can retire as early as age 56 so the FERS supplement is a way of "tiding" those retirees over until they reach 62 and are eligible for social security. Similar to social security, the FERS supplement is reduced if the retiree chooses to work another job after federal retirement.

Now if you work in federal government until at least age 62, the multiplier for the pension is slightly increased, e.g., for 30 years of service you would get an additional 3% of the average of your high three year salary. Then of course, one would not get any FERS supplement but would get a higher pension.

 

[jazz4cash]

........Now if you work in federal government until at least age 62, the multiplier for the pension is slightly increased, e.g., for 30 years of service you would get an additional 3% of the average of your high three year salary. Then of course, one would not get any FERS supplement but would get a higher pension.

Thanks, ABQ.......
I looked into this last bit and I believe it requires retirement at age 62 or above with a minimum of 30 years service.....and I think it is structured as a 10% bonus (1.1% x yrs of service instead of 1.0). Doesn't apply to DW.