Pensions and Social Security, Part 3 – GPO

For the relatively few people involved, today completes the series about pensions that might affect Social Security benefits. 

The general rule is that your company pension will not affect your Social Security benefits because most employment is covered by Social Security.  

The usual exception to this are pensions from government employment not covered by Social Security. A government pension from work covered by Social Security will not affect SSA benefits.

Not covered by Social Security means you did not pay Social Security payroll tax on those earnings, you did not earn coverage for SSA benefits and those earnings do not appear on your SSA work record. Any government level can be involved, not just Federal or state. Local government employment, including school districts, may or may not be covered by Social Security. 

Last week I discussed the Windfall Elimination Provision (WEP), when the person receives Social Security retirement on his or her own record through other work, separate from the non-covered government employment.

Today’s topic is the Government Pension Offset (GPO), involved when the Social Security benefits are through someone else’s record rather than your own work. The GPO affects SSA benefits as a spouse, widow or widower and is a direct offset by the government pension against Social Security benefits.

The Government Pension Offset reduces the amount of your Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. The GPO can offset the total Social Security benefit.

Estimating the GPO amount is not hard. Do the math yourself or use the online GPO calculator. For example, if you receive a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset your Social Security spouse’s, widow’s or widower’s benefits. If you are eligible for a $500 spouse’s benefit, you will receive $100 per month from Social Security ($500 – $400 = $100).

Exemptions exist to the Government Pension Offset (GPO). More about the GPO is in SSA publication 05-10007, Government Pension Offset.

 Other factors that may affect Social Security benefits are part of the SSA online retirement planner at




Pensions and Social Security, Part 2 – WEP

Continuing the topic of how a pension might affect Social Security benefits, the general rule is that your company pension will not affect your Social Security benefits because most employment is covered by Social Security.

So what pensions can affect Social Security? The main pension involved is from government employment, not covered by Social Security. Key is that this government employment was not covered by Social Security, meaning you did not pay Social Security payroll tax on those earnings, you did not earn coverage for SSA benefits and those earnings do not appear on your SSA work record.

Relatively few people are in this situation, but it is important to those that are. Any government level can be involved, not just Federal or state. Local government employment, including school districts, may or may not be covered by Social Security. 

Since their government employment was not covered by Social Security, for those involved any eligibility to a Social Security monthly benefit would have been earned either from other work that the person had on their own or through someone else’s record, such as through a spouse. The government pension not covered by Social Security affects benefits differently depending on this.

Called the Windfall Elimination Provision (WEP), today’s topic is when the SSA benefit is from the person’s own work. SSA benefits through someone else’s record will be covered later.

Enacted in the Social Security Amendments of 1983, the Windfall Elimination Provision provides a different formula for calculating SSA amounts. While not a direct offset or reduction of the government pension against the persons own Social Security benefit, the formula used results in a lower Social Security ­amount than otherwise would be received.

Why is this? Social Security benefits replace a percentage of a worker’s pre-retirement earnings. By design, lower-paid workers get a larger percentage of pre-retirement earnings than higher paid workers. Work not covered by Social Security does not appear on the person’s SSA record. This incorrectly makes the person’s average earnings appear lower, leading to a larger percentage of pre-retirement earnings paid. The Windfall Elimination Provision formula adjusts for this. 

The WEP formula takes into account how many years of work you have under Social Security covered employment. Overall, the reduction in the Social Security benefit cannot be more than one-half of the amount of the pension from work not covered by Social Security taxes.

The Windfall Elimination Provision does not affect most people. More about it is in SSA publication 05-10045 – Windfall Elimination Provision.

Use the special WEP Online Calculator if the WEP involves you. The usual website calculators, including the Retirement Estimator and your Social Security Statement, will not provide an accurate estimate when the WEP is a factor.



How much work is needed for SSA retirement?

Q: For Social Security retirement, I have heard both that you need 10 years of work and 35 years of work. Which is right?  

A: In a way, both are correct but they actually involve two different topics. One topic is the amount of work required to be eligible for Social Security retirement. The other is how the amount of your retirement is calculated. 

All Social Security retirement, survivors or disability benefits have a work requirement that varies with the specific program. You are insured on your record when you have enough work for a given benefit. The amount of work needed is measured by credits, also called quarters of coverage since you can earn a maximum of four quarters per year based on your gross wages and net self-employment earnings. In 2013, earnings of $1,160 provide one credit so earnings of at least $4,640 during the year provide all four.  

For Social Security retirement, a person needs 40 credits, which is where the 10 years comes from. Becoming insured for retirement can take more than 10 years if you have low earnings in a year. With less than 40 credits you are not insured, 40 or more means you have enough work to receive a retirement benefit. Once insured status is established, your number of credits has nothing to do with how much the benefit amount will be.  

Your entire career work history is important in determining your own Social Security retirement amount. To compute this amount, the best 35 years of your work earnings are used. While the highest earnings are often just before retirement, this is not always the case. If you do not have 35 years of work, zero years are used to reach 35 years. These best 35 years of earnings are weighted for inflation as part of computing your full retirement age (FRA) amount. Depending on your actual age when starting benefits, this FRA amount is adjusted up or down as needed to arrive at your retirement amount. 

The online Social Security Statement states if you are insured for the different SSA programs and shows your earnings record history. See your Statement by creating a my Social Security account at A sample Statement is viewable at that link.


Born on first of month – FRA and the retirement test

Q: I reach my full retirement age (FRA) of 66 on May 1, 2013. Is there any significance to waiting until age 66 ½ to start my Social Security retirement? That is when I plan to retire. 

A: You can start your Social Security retirement with whatever month you think best, if you meet all requirements at the time. 

If starting SSA retirement when older than full retirement age, your monthly amount would be more than the full retirement age (FRA) amount. If starting before FRA, the amount would be less than the FRA amount.The amount of increase or reduction depends on the specific number of months involved, not your age in years.

Being born on the first day of the month is important for you. Legal precedent states that a person attains their age on the day before their birthday. When born on the first of the month, Social Security figures your benefit amount and your full retirement age as if your birthday was in the previous month. With a birthday of May 1, you are considered to reach FRA in April. Consider this when deciding when to start your Social Security retirement.  

Estimate your full retirement age (FRA) amount with the Retirement Estimator in the SSA Retirement Planner section ( Then, use your estimated FRA amount with the “compute the effect of early or delayed retirement” calculator to estimate amounts for specific months before or after FRA. This calculator is at

How much will you earn in 2013? The earnings limit (annual earnings test) for people turning age 66, their full retirement age, in 2013 is $40,080. A special monthly, one time, earnings test exists and usually used in the first year of retirement if high earnings are expected that year. Depending on your anticipated 2013 earnings, you might decide to start benefits with January, with a smaller monthly benefit, even though you plan to continue working until May. Use the tools mentioned above to estimate benefits starting with any month. The earnings test stops with the month you reach full retirement age. With no limit on your earnings, starting your Social Security at FRA is another option even if you continue to work.


Social Security Retirement Estimator

Q: I recently attempted to use the Social Security Retirement Estimator.  After putting in my information, I was told it could not be verified. What do you suggest? 

 A: The Retirement Estimator is one of the Social Security retirement planning calculators at

 It will not work if the person lacks enough work to qualify for retirement or if they are receiving Social Security benefits. When neither of these applies, the main reason for the Retirement Estimator not working is related to the security system.  

Use is prevented if personal information entered to the Estimator does not fully match personal information already on Social Security Administration records. This could happen for several reasons but easy examples are when a person’s current name has not been updated on their Social Security number (SSN) card or if their birthdate is wrong. If this is the problem, the Estimator will work once the SSN record is updated.

Call Social Security, either the national number, 1-800-772-1213 (TTY 1-800-325-0778), or your local office. The SSA representative should be able to determine the problem. If needed, SSN record correction can be completed by mail or in person at no charge. See for information and application needed to correct a SSN card. 

When you call, the SSA representative can also provide an estimate for you.


America Saves Week 2013

America Saves Week is from February 25 – March 2.

Started in 2007, this annual event reminds us to focus on the importance of saving. To enjoy a comfortable retirement, we should save, invest, and plan throughout all of the stages of our working careers. Including the Social Security Administration, many national, regional and state groups participate in America Saves Week.

You can assess your personal savings progress and find planning tools at the America Saves Week website, One of these is the “Ballpark E$timate”, an easy to use interactive tool to help you identify about how much you need to fund a comfortable retirement. The “Ballpark E$timate” takes issues like projected Social Security benefits and earnings assumptions on savings, and turns them into easy to understand results.   

Social Security retirement planning tools are at

Are you saving for retirement? Financial planners have told me that people need 70-80 percent of pre-retirement earnings for a comfortable retirement. Your particular plans are important in determining your needs but realize that Social Security will not provide all of your needed retirement income. 

Social Security replaces only a percentage of your pre-retirement earnings and was never intended to provide all of your retirement income. By design, Social Security amounts are computed so that lower-paid workers get a higher return than highly paid workers. For example, lower-paid workers could get a retirement benefit that equals about 55 percent of their pre-retirement earnings. The average replacement rate for highly paid workers is about 25 percent. 

In 2010, 88% of married couples and 85% of nonmarried persons aged 65 or older received Social Security benefits. Unfortunately, for many people Social Security is the major source of income. As reported in Facts & Figures about Social Security, 2012, in 2010 Social Security provided at least 50 percent of total income for 53 percent of age 65+ couples and 74 percent of aged nonmarried beneficiaries. Social Security provided 90+ percent of income for 23 percent of aged married couples and 46 percent of aged nonmarried beneficiaries. While Social Security is certainly very important, plan now so that Social Security is not your only source of retirement income.

How long are you going to live? When considering when to start your Social Security retirement benefits, one important factor to take into account is how long you might live.  

According to data compiled by the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 83. A woman turning age 65 today can expect to live, on average, until age 85. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. 

Your retirement can last many years. Plan for it.


Delayed retirement credits not for survivors benefits

Q: Will my Social Security survivor benefits increase if I delay starting them past full retirement age?

A: No. Unlike your own Social Security retirement amount, survivors benefits do not continue increasing if delayed past your full retirement age (FRA).

Up to age 70, your personal retirement amount increases each month you delay starting past full retirement age. Learn about these increases, called delayed retirement credits, at

Delayed retirement credit increases do not apply to Social Security survivors benefits. Survivors benefits are reduced when started before full retirement age and generally reach their maximum amount if not started until you reach survivors full retirement age. Maximum survivor amounts to you can also be limited depending on the age of the deceased when he or she started Social Security benefits on their record.

Note that full retirement age (FRA) is different for survivors benefits compared to your retirement FRA. See for general information about amounts of survivors benefits at different ages.



my Social Security – create your secure account now

The Social Security Administration announced a major expansion of the my Social Security services on January 7. Up to then, my Social Security services were limited to those over age 18 who were not yet receiving monthly benefits. In particular, people could establish their secure personal account, obtain their individual Social Security Statement, and use it to verify the accuracy of their Social Security earnings record while obtaining estimates of retirement, survivor and disability benefits based on those earnings.  

Since January 7, my Social Security expanded to provide services for people already receiving Social Security or Supplemental Security Income (SSI) benefits.  

Once you create an account, if receiving Social Security you can:

  • obtain a letter proving that you receive benefits including specific information needed
  • check your benefit amount and other payment information
  • view and update information including your address
  • start, view, and change your direct deposit information for electronic transfer of benefits

Those receiving Social Security and Supplemental Security Income (SSI) or only SSI, can use these services except for actually making changes to their record.

The expanded my Social Security has been well received. From January through early February, more than 1,221,000 individuals have logged-in. Of this number, over 509,000 were beneficiaries.

Since initially launched in May 2012 with limited services, to the expanded services available now, over 3,947,000 individuals have successfully created personal my Social Security accounts. Over 30% of my Social Security users are now beneficiaries. These individuals have viewed their online Social Security Statement over 6,642,000 times. 

Several people have told me how easy it was to create their account. You can create an account if you are at least 18 years old and have a valid E-mail address, a Social Security number, and a U.S. mailing address (includes military addresses, APO/FPO/DPO AE, AP or AA).

You may create an account only for yourself. You may not set up an account for another person, even if you have his or her written consent. This also applies to an appointed representative or someone who has business with that person.

Safeguards and optional security methods have been established to verify and protect your identity on your my Social Securityaccount. In my opinion, it is useful to read and understand these before creating your own account. Reminder: The Social Security Administration does not send email to advertise any of our services.

Create your account by going directly to the Social Security website, On the homepage there is a link labeled “my Social Security – sign in or create an account” or you can go directly to Either way, note that the web address has .gov, standing for government. If not .gov, it is not Social Security

Establish your personal my Social Security account and use the available services, but be sure you are at the official SSA website.

Do you have more than one full retirement age?

Q: What is full retirement age? 

A: As usually discussed. full retirement age (FRA) is the age at which a person may first become entitled to an unreduced Social Security retirement benefit. 

Consider full retirement age as a point in time. If you start retirement benefits before full retirement age, they are reduced by the number of months that you are early. Benefits started after your FRA increase based on the number of months that you are past. If you start Social Security exactly at full retirement age, benefits are full, neither reduced nor increased. For Social Security retirement, you may start receiving benefits as early as age 62 or as late as age 70 no matter what your FRA is.

Originally age 65 when SSA retirement began, full retirement age, also called normal retirement age, has gradually been increasing based on year of birth since the 1983 Amendments. Resulting from that 1983 legislation, FRA for Social Security retirement purposes is scheduled to increase to age 67 for those born in 1960 and later. For people born in 1943-1954, FRA is age 66. Learn your retirement FRA at

Often overlooked but important, is that full retirement ages are different for Social Security retirement compared to survivors benefits. The earliest a widow or widower can start receiving SSA survivors benefits based on age is age 60, younger than SSA retirement benefits. Surviviors benefits do not increase if delayed past full retirement age. FRA for Social Security survivors benefits is scheduled to increase to age 67 for those born in 1962 and later. For people born in 1945-1956, survivors benefits FRA is age 66. Learn your survivors FRA at                    

Discussions of Social Security full retirement age, including in these posts, usually refer to retirement only and rarely point out the difference for survivors benefits. However, this is important if you might be eligible for both types of benefit.

Advantages and disadvantages exist to starting Social Security either before or after FRA. The decision is yours based on your plans, family situation, finances and other items not discussed today. See for some things to consider.


New my Social Security Account Online Services Available

Today the Social Security Administration announced a big expansion to services available with a my Social Security account. The full press release follows.

Social Security Announces New Online Services Available

with a my Social Security Account

Michael J. Astrue, Commissioner of Social Security, today announced the agency is expanding the services available with a my Social Security account, a personalized online account that people can use beginning in their working years and continuing throughout the time they receive Social Security benefits. More than 60 million Social Security beneficiaries and Supplemental Security Income (SSI) recipients can now access their benefit verification letter, payment history, and earnings record instantly using their online account. Social Security beneficiaries also can change their address and start or change direct deposit information online.

“We are making it even easier for people to do their business with us from the comfort of their home, office, or library,” Commissioner Astrue said. “I encourage people of all ages to take advantage of our award-winning online services and check out the new features available through an online my Social Security account.”

Social Security beneficiaries and SSI recipients with a my Social Security account can go online and get an official benefit verification letter instantly. The benefit verification letter serves as proof of income to secure loans, mortgages and other housing, and state or local benefits. Additionally, people use the letter to prove current Medicare health insurance coverage, retirement or disability status, and age. People can print or save a customized letter. 

Social Security processed nearly nine million requests for benefit verification letters in the past year. This new online service allows people to conduct business with Social Security without having to visit an office or make a phone call, and very often wait for a letter to arrive in the mail. It also will reduce the time spent by employees completing these requests and free them to focus on other workloads.

People age 18 and older can sign up for an account at Once there, they must be able to provide information about themselves and answers to questions that only they are likely to know. After completing the secure verification process, people can create a my Social Security account with a unique user name and password to access their information.

People age 18 and older who are not receiving benefits can sign up for a my Social Security account to get a personalized online Social Security Statement. The online Statement provides eligible workers with secure and convenient access to their Social Security earnings and benefit information, and estimates of future benefits they can use to plan for their retirement. In addition, the portal also includes links to information about other online services, such as applications for retirement, disability and Medicare.

“Given our significantly reduced funding, we have to find innovative ways to continue to meet the needs of the American people without compromising service,” said Commissioner Astrue. “These new enhancements will allow us to provide faster service to more people in more places.”

For more information, please go to