Since Jan receives a non-covered pension, the Windfall Elimination Provision (WEP) will likely reduce her Social Security retirement benefits based on her earnings record. In addition, if she applies for spousal benefits or survivor benefits based on Ken’s earnings record, the Government Pension Offset (GPO) will reduce and possibly eliminate these benefits. (Later, we will explain how Jan’s non-covered pension would affect Ken’s retirement benefits, spousal benefits, and survivor’s benefits.)
If Jan were not receiving a non-covered pension, her retirement benefits on her earnings record would be based on her unadjusted PIA of $900. But the WEP reduces her PIA to $544. The size of the WEP adjustment, if any, varies by birth year and the number of years of “substantial earnings” subject to Social Security taxes. In addition, Jan’s spousal benefits and survivor’s benefits, which are based on Ken’s earnings record, are reduced due to her non-covered pension. The GPO reduces or eliminates monthly spousal benefits and survivor’s benefits by two-thirds of the amount of the non-covered pension. Once Ken files for benefits (or files and suspends his benefits), Jan would be eligible to claim a spousal benefit based on Ken’s earnings. If she filed for spousal benefits at her full retirement age, she would receive $1,000, essentially half of Ken’s PIA. However, the GPO would eliminate her spousal benefit because two-thirds of her $2,400 pension exceeds her spousal benefit. She would receive only her own Social Security retirement benefits of $544.
Now, let’s see how Jan’s non-covered pension would affect Ken’s retirement benefits based on his record, his spousal benefits, and his survivor’s benefits. Jan’s non-covered pension would not reduce Ken’s own retirement benefits based on his earnings record. But can claim spousal benefits based on Jan’s WEP-reduced benefit amount of $544. If Jan predeceases Ken, his survivor’s benefits would be based on her unadjusted PIA of $900. Finally, if had they ran and implemented their optimal strategy and they lived to/past age 85 then they would have received over $150,000 in benefits, in today’s dollars.
We specialize in helping our clients plan for retirement and we have invested extensively in providing the highest quality advice.
We can efficiently evaluate your Social Security benefits, analyze your individual circumstances, and formulate a plan tooptimize/maximize your Social Security benefits. It will only take you 20 minutes on the phone and one 90 minute strategy meeting to accomplish this important task that could help you to realize $10,000 to $600,000 in additional benefit (in non-inflation-adjusted dollars).