Widower’s retirement stymied by Social Security’s WEP and GPO rules

Dear Rusty: My wife passed away 4 years ago. I want to retire so called SSA and was told I can collect my own SS at 62, reduced by WEP. My wife’s SS was greater than mine, but they said I do not qualify for hers at age 60 because of the GPO. This seems odd that I get zero for her, however I can collect mine at the two thirds reduction at 62. Is this true? This zero dollar amount places my retirement on hold for now. I was counting on her SS. Signed: Discouraged Widower

Dear Discouraged: The Windfall Elimination Provision and the Government Pension Offset are two of the most confusing (and unpopular) of Social Security’s myriad rules. From the way you describe your conversation with the Social Security Administration, it doesn’t appear to have concluded with you fully understanding how these provisions work, so allow me to elaborate.

WEP and GPO affect anyone who has a retirement pension from a federal, state or local government agency which did not participate in Social Security, meaning neither the employee nor the employer paid into Social Security based on the employee’s earnings. Obviously, you have such a pension, which means that WEP will reduce any Social Security retirement benefit you have earned from other employment where SS payroll taxes were withheld, and the GPO will affect any survivor benefit you are entitled to.

WEP affects only the SS retirement benefit you earned elsewhere; WEP does not affect any surviving spouse benefit you might be entitled to from your wife. Rather, it is the GPO which affects your survivor benefit, again because of your state retirement (called a “non-covered pension” – one earned without contributing to Social Security). The GPO will reduce any surviving spouse benefit you might be entitled to by 2/3rds of the amount of your “non-covered” state pension. Depending on the size of your state pension, that reduction may entirely eliminate your surviving spouse benefit from your wife.

Under normal SS rules, a surviving spouse does not become eligible for survivor benefits until they reach age 60 (age 50 if disabled). Normally, a surviving spouse benefit claimed at age 60 is reduced by 28.5 percent and it is the GPO (not WEP) that will affect your survivor benefit whenever you claim it. However, even without GPO, your age 60 survivor benefit amount would be only 71.5 percent of the amount your wife was receiving (or entitled to receive) at her death. If you are already collecting your non-covered state pension when you claim your SS survivor benefit from your wife, then that reduced age 60 survivor benefit would be offset by 2/3rds of the amount of your state pension. And that (according to what Social Security told you) is what eliminated your age 60 eligibility for a surviving spouse benefit from your wife. If you don’t claim it at 60 your survivor benefit will continue to grow until you reach your full retirement age (FRA) of 67, but if 2/3rds of your state pension is more than 100 percent of your SS survivor benefit, you still won’t get any surviving spouse benefit from your wife’s record.

A further consequence of your non-covered state pension is that the SS retirement benefit you earned elsewhere will be reduced by WEP. WEP will reduce, but cannot eliminate, your Social Security retirement benefit. The WEP formula is complex but, generally, your WEP-based Social Security retirement benefit will likely be roughly half of what you would get if you did not have a state “non-covered pension.” You could claim your WEP-reduced SS retirement benefit as early as age 62 or, if financially feasible, delay longer to get a somewhat higher (but still reduced) amount.

Just FYI, your state employer had an obligation to fully inform you of the consequences of not contributing to Social Security while earning your state pension. It appears as though they may not have fulfilled that obligation.