Q: As a follow-up to your column last week, could you explain a related Social Security topic that may impact my Social Security benefit?
I worked for a local government and will receive a small pension from that employment two years from now when I turn 65. My husband worked in the private sector and has always paid Social Security taxes on his earnings. When I worked, I did not pay into the Social Security system.
His Social Security benefits will be about $2,000 a month, and we assumed that I would receive half of his if I waited until my full retirement age. It even says so on his statement. A friend told me they thought my pension will be reduced if I take half of his Social Security. Can they do that? If so, am I still better off taking half of his Social Security so I will get 100 percent of his benefit if should predecease me?
With the onslaught of retiring baby boomers, Social Security will be a popular topic this decade.
Like the Windfall Elimination Provision, or WEP, discussed in last week's column, the Government Pension Offset, or GPO, may impact Social Security benefits for some people eligible for a federal, local or state government pension where no Social Security taxes were paid.
The main difference is that the GPO applies if a spouse or surviving widow or widower has a pension from a job in which no Social Security tax was paid and the WEP applies if the worker has the pension, not the spouse. The WEP will reduce the spousal Social Security benefit, but the reduction of this spousal benefit will be eliminated if the worker dies and the spouse receives a survivor benefit. The GPO reduces the spousal Social Security benefit as well as the survivor benefit.
The GPO will have no impact on your pension. Neither the WEP nor the GPO benefit reductions are reflected in the Social Security statements. Social Security doesn't know whether you or your spouse are entitled to pensions from non-Social Security jobs until you apply for benefits and are asked to provide this information.
Your Social Security benefits will be reduced by two-thirds of your government pension. If your pension is $600 and your spousal Social Security benefit is $1,000, your benefit will be reduced to $600 ($1,000 minus two-thirds of $600). If your husband dies before you and his Social Security benefit is $2,000, you will receive a spousal survivor benefit of $1,600, not $2,000. The amount of your pension will not change.
If you elect to receive your pension as a lump sum, your spousal and survivor Social Security benefits will still be reduced. The Social Security Administration will calculate the reduction as if your pension was paid out monthly. Call 800-772-1213 or visit www.ssa.gov for more information.
