Jill’s husband, Jack, has always worked in the private sector.
His social security benefit will be $2,500 per month at
FRA. Jill understands that she is eligible to claim as Jack’s
spouse but wonders how her pension will affect her spousal
benefit. The GPO Calculator shows that Jill’s spousal
benefit will be completely offset. The most she can expect
to receive is $192 per month on her own earnings record.
Rethinking a Common Social Security
Claiming Strategy
When working on retirement income planning with your
clients, you may recommend that they consider the popular
“Claim Now and Claim More Later” strategy, which aims
to maximize a couple’s social security benefits over their
lifetime. With this strategy, once reaching FRA, the spouse
14
For Advisor Use Only
January/February
2014
8 Things You May Not Know About Social Security and the Government Worker
1. The WEP applies to the public employee’s worker benefit. The GPO applies to the public employee’s benefit as a
spouse. The WEP applies to the benefits received as the spouse of a public employee. The GPO never applies to the
benefits of the spouse.
2. Not every government pension will reduce social security retirement benefits. Only government pensions based on
noncovered earnings are subject to the WEP and GPO.
3. The WEP will never totally eliminate a government worker’s pension, but the GPO can eliminate the government
worker’s benefit as a spouse or survivor.
4. The WEP reduction will never be more than one-half of the monthly noncovered pension. This helps ensure that
workers with low pensions will get a social security benefit.
5. The WEP affects the benefit of the spouse of a public employee, but it does not affect the benefit of the survivor of
a public employee. If the public employee dies before the spouse reaches age 70, the survivor benefit will replace
the spousal benefit, increasing to the amount the public employee would have received before the WEP was
applied. Plus, the survivor can continue delaying his or her own benefit (and accruing credits) until age 70.
6. Taking a lump-sum distribution of a government pension at retirement will not avoid the WEP and GPO reduction
on social security benefits. The only way to avoid the provisions would be for the employee to forfeit his or her
rights to the pension, which would allow the employee to withdraw his or her own contributions and interest but
forgo the employer’s contributions.
7. The GPO doesn’t apply until the worker’s pension begins. If the worker applies for social security before the pension
kicks in, the benefit will not be reduced.
8. Most government workers are eligible for Medicare even if they are not eligible for social security. The annual social
security statement will list Medicare wages if the worker paid Medicare taxes on those earnings.
Wealth Management
/ Planning
