Social Security and your other pensions – GPO

Pensions generally do not reduce the amount of your Social Security but a pension based on earnings not covered by Social Security can do so.

The previously mentioned Windfall Elimination Provision (WEP) could affect the amount of your own Social Security retirement if you work for a federal, state or local government agency, a nonprofit organization or in another country and do not pay into Social Security.

What if you do not have enough Social Security covered employment to receive your own retirement benefit but you are eligible for Social Security benefits as a spouse or widow / widower? Then, if you will receive a pension from work not covered by Social Security, the Government Pension (GPO) will likely interest you.

Unlike the WEP, which involves a changed method of computing benefits, the Government Pension Offset (GPO) is a direct reduction of the SSA benefit amount as described on the SSA website, in part shown below. Some GPO exemptions apply. More about these exemptions are on the website.

From the website:

“If you receive a pension from a government job in which you did not pay Social Security taxes, some or all of your Social Security spouse’s, widow’s or widower’s benefit may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset, or GPO. 

The GPO will reduce the amount of your Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. 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).”  

Go here for more about the Government Pension Offset (GPO).

Just like the Windfall Elimination Provision, the Government Pension Offset is not new. Both date back to the Social Security Amendments of 1983, signed into law by President Reagan on April 20, 1983. Designed to resolve short-term funding problems faced at the time, that legislation made significant changes to the Social Security and Medicare programs.

GPO

 

From wife to widow

Q: My dad died this month at age 89 and is survived by his wife, my stepmother. She is in her 80’s and her Social Security amount is less than his. What does she need to do to get his Social Security benefits?

A: Before getting to this question, two points must be emphasized.

First, always contact Social Security when there is a death in the family. Call the national SSA toll-free number at 1-800-772-1213 (TTY 1-800-325-0778) or your local office. If additional benefits are payable, action can begin to start them and, if not, other information can be given.

Second, when eligible for SSA benefits on two records, such as your own retirement and as a widow or widower, you receive the higher benefit amount and not all of one plus all the other.

Since her Social Security amount is less than his, it is probable that her amount will increase to about what his had been.

If she now receives Social Security benefits as a spouse on her husband’s record, changing to a widow’s benefit will take place automatically once his death is reported to Social Security. This is because information about her is already part of his record, including evidence of marriage.

If not yet receiving benefits as a spouse, and therefore not yet connected to his record, she will need to complete an application for survivors benefits as his widow. This is easy to do and can be completed during a telephone or personal interview however she prefers. Evidence of their marriage and his death will be requested. All documents are returned to her.

In addition to increased ongoing benefits, she will probably be eligible for a one-time Social Security benefit of $255 to help towards funeral costs. This is arranged with the monthly survivors benefits.

Your dad would not be eligible to Social Security for the month of his death. Benefits for a month are paid in the following month. If received, these are usually returned to Treasury by the bank. However, she will be eligible for the widow’s benefit for the month of death.

More about Social Security survivors benefits is at http://www.socialsecurity.gov/survivors/.

 

Divorced spouse benefits

Q: My ex-husband always earned much more than I did and I anticipated receiving Social Security through his record when he retired.

His retirement plans changed after our divorce and now he expects to continue working for several more years, or at least until he is much older than 62.

Can I receive Social Security as a divorced spouse from his Social Security record before he retires?

A: Yes, this is possible assuming all requirements are met. General requirements to receive Social Security benefits as a divorced spouse are here and include that:

  • the marriage lasted 10 years or longer
  • you are unmarried
  • you are age 62 or older and
  • you are not eligible for a higher Social Security through your own work than you would through the record of your ex-spouse.

When receiving benefits through an ex-spouses record, that person is usually receiving benefits too but an exception exists which could let you receive benefits  before your former husband starts Social Security.

If your ex-spouse has not applied for retirement benefits, but can qualify for them, you potentially could receive benefits through his record if you have been divorced for at least two years. To qualify for benefits means that your ex-spouse has enough work and has reached age 62.

You would be known as an “independently entitled divorced spouse” for SSA benefit purposes if you receive benefits this way.

 

Medicare for spouse, without monthly benefits

Q: I receive Social Security and will be eligible for Medicare in 2017. My wife will be 65 at that time. She has not been employed long enough to receive her own Social Security retirement and does not want to start receiving as a spouse through my record until she is age 66.

Will my wife be able to get Medicare in 2017 on my work record at age 65 even if she has not applied for monthly Social Security benefits?

A: If a person is receiving Social Security benefits, his or her spouse can file for Medicare through their record at age 65 without filing for monthly cash benefits. Medicare Part A (Hospital) does not have a monthly premium. Medicare Part B (Medical) has a monthly premium.

At the Social Security website, www.socialsecurity.gov, is the following:

“If you are within three months of age 65 or older and not ready to start your monthly cash benefits yet, you can use our online retirement application to sign up just for Medicare and apply for your retirement or spouses benefits later.” 

Information about benefits to a spouse is here. Age based benefits to a spouse can be started as early as age 62, at a reduced amount, so she does not need to wait until age 66 to begin monthly Social Security benefits. The choice is hers.

Note that future legislation can change existing rules.

 

SSA Annual Statistical Supplement, 2014, available

The Social Security Annual Statistical Supplement, 2014, is available now.

Prepared annually since 1940, the Supplement is a major resource for data on our nation’s social insurance and welfare programs. The majority of the statistical tables present information about programs administered by the Social Security Administration—the Old-Age, Survivors, and Disability Insurance program (OASDI), known collectively as Social Security, and the Supplemental Security Income (SSI) program.

In addition, data are presented on the major health care programs—Medicare and Medicaid—and social insurance programs, including workers’ compensation, unemployment insurance, temporary disability insurance, Black Lung benefits, and veterans’ benefits. The Supplement also includes program summaries and legislative histories that help users of the data understand these programs.

There is a wealth of useful information in the Supplement. View the Table of Contents and find the topics of interest to you.

Here are some tidbits from the Highlights and Trends section:

Social Security:

About 58.0 million persons received Social Security benefits for December 2013, an increase of 1,220,425 (2.2 percent) since December 2012. Seventy percent were retired workers and their spouses and children, 11 percent were survivors of deceased workers, and 19 percent were disabled workers and their spouses and children.

  • Seventy-three percent of the 37.9 million retired workers received reduced benefits because of entitlement prior to full retirement age. Relatively more women (75.4 percent) than men (70.3 percent) received reduced benefits.

Supplemental Security Income:

  • In December 2013, 8,363,477 persons received federally administered SSI payments—100,600 more than the previous year. Of the total, 2,107,524 (25.2 percent) were aged 65 or older; 4,934,272 (59.0 percent) were blind or disabled aged 18–64; and 1,321,681 (15.8 percent) were blind or disabled under age 18.

Medicare:

Number of enrollees in July 2013 (one or both of Parts A and B)   52.4 million

Aged                                     43.6 million

Disabled                                   8.8 million

Unemployment: Total payments, 2012    $42.6 billion

Workers Compensation: Benefit payments, 2012  $61.8 billion

Veterans’ Benefits:

Number of veterans with disability compensation or pension, 2013

Service-connected disability                     3,734,000

Nonservice-connected disability                   305,000

Poverty Data:

Percentage of population with income below poverty level, 2013

All ages                                                              14.5 percent

Children under age 18 living in families              19.5 percent

Persons aged 65 or older                                     9.5 percent

2014 Statistical Report

Average Social Security and SSI amounts in February 2015

For February 2015, following are three easily understood tables providing Social Security and Supplemental Security Income (SSI) information. These tables are online here.

Supplemental Security Income (SSI) is a separate, low-income program for the aged over 65, disabled or blind children, and disabled or blind adults that is administered by the Social Security Administration. Since SSI is completely different from Social Security, a person meeting the individual rules for each could become eligible for both programs. Income from Social Security reduces SSI amounts.

Learn more about Social Security and SSI at www.socialsecurity.gov.

Table 1 shows the number of people, in thousands, receiving Social Security and Supplemental Security Income (SSI) divided by Social Security only, SSI only, and people receiving both.

The “notes” in table 1 explain the difference in total Social Security beneficiaries shown between table 1 and table 2.

2015-02 table 1

Table 2 shows Social Security benefit information for February 2015, separated by number of beneficiaries receiving specific types of benefits and the average dollar amount of those benefits. The number of beneficiaries is again shown in the thousands, with total benefits shown in the millions and average amounts in dollars.

Social Security was never intended to provide full retirement income and this table emphasizes that fact. In February 2015, the average SSA retirement benefit, for the retiree only and excluding any family benefits, was $1,331.44.

2015-02 table 2

Table 3 shows Supplemental Security Income (SSI) benefit information for February 2015, separated by number of recipients receiving specific types of benefits and the average dollar amount of those benefits.  As above, the number of recipients are shown in the thousands, total benefits shown in the millions and average amounts in dollars.

In February 2015, the average SSI amount was $539.61. The 2015 maximum payable to an eligible individual is $733 per month. This maximum is reduced by other income, including Social Security benefits.

2015-02 table 3

These tables are online here.

Changing a child’s representative payee

Q: My ex-wife receives Social Security disability benefits for herself plus benefits for our daughter, for whom she has custody. Within the next few months, I will have custody and our daughter will live with me full-time.

Will Social Security start sending benefits for her to me or will they continue going to my ex-wife? Will the amount change when she is living with me?

A: A person receiving benefits on behalf of someone else is their representative payee. As a general guideline, the parent with legal custody is the preferred payee compared to a parent without custody but exceptions exist based on individual situations.

Changing the representative payee for your daughter, or anyone, is not automatic. You will need to request a change by completing an application to be the new payee for your daughter. This is not an online application so contact your Social Security office to do this. Expect to prove that you have custody and that your daughter is living with you.

A worker’s, in this case your ex-wife, own Social Security amount is based on his or her earnings history over many years. Benefits to a child or other family member do not change how much the worker receives for himself or herself.

Assuming you become your daughter’s representative payee, with her benefits sent in your care, the individual Social Security benefit of your ex-wife will not change although she would no longer receive the amount for your daughter.

The Social Security benefit amount for a child is based on the earnings record of the worker and will be the same wherever the child is living.

Representative payees are responsible for using Social Security benefits on behalf of the eligible person. As representative payee, you will have to report how funds for your daughter are used. Other responsibilities include reporting if your daughter is no longer living with you. Details are in the Guide for Representative Payees.

Retirement amount not limited by marriage

Q: Is there a total amount of Social Security benefits payable to a couple?

A: No, although this is a popular myth.

There is no marriage penalty, limit or other reduction when each member of a couple is eligible for their own Social Security retirement. Amounts to each member of the couple are based on their personal work records and ages when starting retirement. Amounts received by husband or wife do not affect what the other receives. Each independently starts Social Security when best for them.

Go to the SSA Retirement Planner at www.socialsecurity.gov/planners/retire/ to estimate your personal benefit amount at different retirement ages.

Note that the above refers to when each member of the couple receives their own, individual, retirement. There can be a financial benefit to a married couple if both receive Social Security through one person’s work record instead of separately.

For example, this could be if one member of a couple had low career earnings and was eligible for spousal benefits as husband or wife instead of their own personal retirement. In this case, the amount of spousal benefits is limited because they are based on the earnings of the person with the higher career earnings and not their own work record.

More about spousal and other family benefits is at the SSA Retirement Planner in the “Already near retirement age” section or go directly here.

Earnings test not just for retirement benefits

Q: Do the Social Security earnings limits apply just to retirement? Do they apply if receiving widow’s benefits?

A: Yes, earnings limits apply for survivor benefits. The annual earnings test applies individually to everyone younger than their full retirement age (FRA) unless that person receives benefits due to their own disability. People of all ages receive Social Security and the earnings test applies to many of them.

For examples, if both members of a couple receive Social Security retirement, the earnings test applies separately to each until full retirement age. The earnings test also applies to a child, not disabled, receiving benefits through a parents record whether the parent is retired, disabled or deceased.

The earnings test does not apply to people receiving benefits because of their own disability but it does apply to non-disabled family members, including spouse and children, receiving benefits through the disabled person’s record.

Many young people receive Social Security benefits. Earnings test amounts are the same whether SSA retirement, survivors or disability is involved. Different amounts can be earned during the calendar year before benefits are reduced based on if the person is under full retirement age (FRA) the entire year, reaches FRA during the year, or is already FRA. The earnings test ends when you reach FRA.

Based on year of birth, full retirement age ranges from 65 to 67. Retirement FRA is 66 for people born in 1943 – 1954. Note that FRA’s for survivors benefits are different from retirement FRA’s.

Earnings test details are here.

Separate earning rules and work incentives apply if you receive Social Security due to your own disability. Contact Social Security before returning to work. General information is here.

America Saves Week 2015

America Saves Week, February 23 – 28, 2015, reminds us all to focus on the importance of saving and investing for the future. The Social Security Administration is one of many public and private organizations participating in America Saves Week.

Steps toward achieving financial goals include saving, investing and planning throughout an entire career.

What is the status of your savings? According to the America Saves Week website, www.americasavesweek.org/, you should assess your savings annually to make sure you are saving for all the right things and it provides several questions to help you do this.

Someday you will want to retire. Prepare for it. Now is the perfect time to examine your saving habits. Are you on track for a comfortable retirement?

Estimate your future SSA retirement amount with the Social Security online Retirement Estimator, one part of the SSA Retirement Planner. The Estimator connects to your actual work record to provide a personal estimate. You can change the default estimates for those more in tune with your actual plans.

Create a my Social Security account and view your Social Security Statement. Along with your Social Security earnings record, the Statement provides estimated retirement amounts plus family benefits should you become disabled or die. This information helps you arrange other parts of your financial planning.

Social Security personnel cannot assist with financial planning. Select your own helpers for this. Two websites to help you get started are www.mymoney.gov, the official U.S. government website dedicated to teaching Americans the basics of finances, and the Ballpark Estimator at www.choosetosave.org/ballpark, part of the American Savings Education Council program, which includes the Social Security Administration.

These sites, and others like them, are not just about savings for retirement. There are reasons to save for every stage of life.

To help your planning, here is a Test Your Savings Knowledge question from the American Saves Week website:

Q: About how much more do families with a savings plan save than those without such a plan?

A: According to one study, if family incomes are the same, those families with a plan save about twice as much as those who do not have one.