What Happens to My Social Security If I Stop Working?

The government pension offset. Let’s talk about this. A lot of people don’t know how this works and it’s a big deal. If this affects you, teacher’s in particularly, a lot of police officers, firefighters.

I had a guy the other day from Philadelphia, part of the Philadelphia City police force and he said he hasn’t paid into social security for 22 years. So if you haven’t paid into social security and you work for a government that has a pension that’s not paying social security, again, a lot of LEOs, close to 40%. It seems like, at least in my surveys, about 40% Leo’s, law enforcement officers, don’t pay into social security. , So GPO is a big deal. A lot of teachers in this case, we’re gonna talk about a Texas teacher here., So let’s go into this.

A lady I worked with in Texas, , who, had some money, a small amount with Morgan Stanley, My friend here is, is about to retire. And I think at like one and a half million that he was going to rollover. And I think Morgan Stanley, the guy who was working with was assuming he was going to get the proceeds to get that 1% a year fee. And I said, look, just go to vanguard. So they have their vanguard call, the other day it was interesting. I’ll share some of that information with you as well. but they said our Morgan Stanley guy’s not taking this well, he is saying that my wife would be eligible for a spousal benefit of two thirds of her pension and this amount will be higher if I waited until FRA.

Does this make sense? He says many advisors do not understand the social security benefits, , for teachers and assume none is available. , and he’s talking about in regard to the GPO, the government pension offset. So let’s just read exactly what the GPO says. , GPO, , from straight from the social security source here. You’re not, this is a social security.gov/or you just type in GPO and you’ll get to it. A government pension offset your non-covered pension may affect your benefits as a spouse or widow or widower. If you receive a pension from a government job in which you did not pay social security taxes, some or all of your, so social security spouses widow’s benefit maybe offset due to that pension. The offset is referred to as a government pension offset. So remember we had the window windfall elimination provision of Web that affects you and your own benefit and I think the Max that you lose on weapons 454 bucks this year, it goes up each year.

The GPO is four year survivor benefit or your spousal benefit has nothing to do with your own benefit because you don’t get any essentially. But if you were to receive a survivor benefit or a spousal benefit, it could be reduced. We don’t get anything so it’s taught, but the GPO reduces the amount of your social security spouses or widow’s benefit by two thirds of the amount of your government pension. For example, if you receive a monthly civil service pension of 600 bucks, so you’re a teacher, you got $600 a month pension, two thirds of that or $400 must be used to offset your social security’s benefit. If you are eligible for a $500 a month spousal benefit, you will receive $100 a month from social security because you are going to get $600 as your pension from the, from Your County Teachers Union, whatever of that, two thirds of that will be reduced or GPO.

So you only get $400 of that will be subtracted from your pension of , , so if $400 of your $600 pension will be removed just because of GPO, is that makes sense. , and so now your spousal benefit is 500 bucks because that would essentially, we’ll say to your spouse had a pia have $1,000. So your spousal benefit is 500 bucks a month, but you’re going to lose two thirds of that because of the GPO. You’re going to lose 400 bucks, not two thirds of the spouse of Benton, but you’re going to lose two thirds of your government pension because of GPO. So in this case, you’re only gonna make a hundred bucks a month clear as mud right? Now, let’s put it this way. Let’s say you had a pension. Your own pension was $1,000. You’ll lose two thirds of that in that case, are going to lose $660 roughly.

, well, if your spousal benefit is only 500, you’re going to lose everything. You’re not gonna have any spousal benefit, all because the GPO. Now, if the spousal benefit is 500 and that means the, the sort of vibe or benefit we’ll say was 1000 bucks, you will lose $660 of that survivor benefit when your spouse dies. So you gain was at 340 bucks or something like that. So you will get that, but you will lose again, two thirds of your government pension. And that’s why they call the government pension offset because you haven’t been paying into social security. , so here’s some widows are exempt from the offset. Generally your social security benefit as a spouse, widow or widower will not be reduced if you are receiving a government pension that is not based on your earnings or are a federal including civil service, offset state or local government employees who pension’s based on job in which you are paying social security taxes.

And again, that’s what it comes down to. If you are paying into social security taxes, , you won’t be offset because you were paying literally paying the taxes. So a couple of every single union has his own contracts, his own rules. So every single department might say, oh, we recognize the GPO, so we’re going to increase your pension by a certain amount. That might be the case. , highly suspect that’s not the case. The bulk of the times though. So in this case, remember the GPO, the government pension offset. If you haven’t been paying into social security, you will lose a two of the benefit of your spousal or widow’s benefit. , two thirds of what you receiving as your government pension. So if you’re a widow’s benefit as 1000 bucks a month and your pension is $1,000 a month, and you’re going to lose two thirds of that widow’s benefit because your pension and your a widow’s benefit are the same, so you’ll get again, three 40 if your spousal benefit is $500 a month and your government pension is a thousand, you’re not gonna get any spousal benefit because two thirds of the government pension offset is more than your spouse benefit.

Nope, that makes sense. , a lot going on there with GPO. So just keep that in mind as an important thing to understand. All right, thanks. We’ll see you next time.

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