Over the past 17 years that I have been doing this column, I have written about 50 columns dealing with the Social Security offsets that impact some state and local government employees who work at jobs not covered by Social Security. In many ways, I don’t like discussing this topic because it impacts just a small percentage of my readers.
To put it another way, the vast majority of people in this country work at jobs in which Social Security taxes are deducted from their paychecks. Less than 10 percent of Americans work at jobs not covered by Social Security. But they are a very vocal minority who have been misled over the years into thinking that the government is out to con them out of Social Security benefits. I will use today’s column to show just the opposite is true.
Q: I recently retired at the age of 62. I had been a teacher in California for much of my working life. As such, I did not pay into Social Security. I paid into the California State Teacher’s Retirement System. I now get a STRS pension of $2,275 per month. My 72-year-old husband is getting $2,150 per month in Social Security retirement benefits. What really bothers me is the law that says that because of my teacher’s pension, I won’t be able to get any of his Social Security when he dies. When will they repeal this terrible offset law?
A: I don’t think they ever will repeal that law. Nor should they. And your question provides a classic example of how the public pension offset laws have been misunderstood. What you will learn by the end of my answer is that those laws actually help you. They will be giving you a Social Security benefit that 90 percent of working people in this country do not get. Now let me explain.
Ever since the beginning of Social Security, the law has always said that a Social Security retirement benefit offsets any benefits you might be due on a spouse’s Social Security account. And that offset is 100 percent — or dollar for dollar.
For example, let’s say that instead of getting a teacher’s retirement pension of $2,275, you were instead getting a Social Security retirement pension of $2,275. And then let’s say your husband died. You would not be due any widow’s benefits because 100 percent of your own Social Security benefit, or all $2,275 of it, would be used to offset your potential widow’s benefit of $2,150. A big part of the reason that dollar for dollar offset law has always been in place is because Social Security spousal benefits are classified as “dependent” benefits. In other words, you must be financially dependent on your husband before you could claim wife’s or widow’s benefits on his account. Because you had your own job and your own pension, you do not meet that dependency test.
But for many, many years, teachers and other retirees getting non-Social Security pensions jumped through one of the biggest loopholes in Social Security’s legislative history. They were able to get their government retirement pension AND they were able to get full dependent’s benefits from their spouse’s Social Security account. Nobody else got such a deal. Just teachers and police officers and other public employees in those 10 percent of jobs that were not covered by Social Security.
About 30 years ago, Congress recognized that was simply not fair. So they passed the Government Pension Offset law. And what that law simply says is that teacher’s retirement pensions, police retirement pensions and all other noncovered government retirement pensions should be treated just like Social Security retirement pensions. They should be used to offset any benefits you might be due on a spouse’s Social Security account.
But the GPO law actually cuts teachers and other government employees a huge break. Instead of a 100 percent offset that applies to all Social Security retirees, the law imposes only a 66 percent offset. Or what the law actually says is that an amount equal to two-thirds of your teacher’s pension will be used to offset any Social Security spousal benefits you are due from your husband.
You said you get a teacher’s pension of $2,275. Two-thirds of that is about $1,516, and only that amount will be deducted from future widow’s benefits. So if your husband died tomorrow, you’d get your $2,275 teacher’s pension and you’d get $634 in widow’s benefits from Social Security.
I hope you understand the deal you are getting because of the offset law. If you had been getting Social Security retirement instead of a teacher’s retirement, you would get zero dollars in widow’s benefits. But with the offset law, you will get $634 extra per month.
