Can You Help Me Understand How WEP And GPO Would Apply?

May 27 2020 - 9:41am

Hello,

A husband (62) and wife (58) are deciding when to best take Social Security. The husband worked in private industry for 40+ years and the wife worked in private industry for 32+ years but only 24 of those years is considered "substantial earnings" according to Social Security. The wife has worked for the State (Colorado) for over 10 years and is under the PERA system and will receive a monthly pension from PERA of $2,459/mo when she retires at 65. The husband is retiring this year. His PIA at his FRA is $2,939 and the wife's PIA at her FRA is $1,516. I think she would be impacted by the WEP which means that her PIA at FRA would may or may not be half if his benefit. Can you please help me understand WEP vs GPO for the wife and when it's best to start taking Social security. Thank you.

Hi,

I agree that it sounds like the Social Security retirement benefit rate of the wife you're referencing would be reduced due to the Windfall Elimination Provision (WEP). WEP doesn't apply until a person starts receiving a non-covered pension, though.

Since the non-covered pension this wife will be drawing is based on government work, if she's drawing her government pension then any spousal or survivor benefits for which she'd otherwise qualify would almost certainly be offset by 2/3rds of the amount of her government pension due to the Government Pension Offset (GPO) provision. So, even if WEP causes her primary insurance amount (PIA) to be less than half of her husband's PIA, GPO would reduce her spousal benefit rate to zero provided that she's drawing her PERA pension.

If her husband dies before her and if the wife is at least full retirement age (FRA), she could be paid up to the higher of her own benefit rate or her husband's rate. But again, GPO offset would apply to the survivor rate if she's drawing the PERA pension. Whether or not that would reduce her widow's rate to less than her own rate depends on when each spouse starts drawing their benefits.

Our software (https://maximizemysocialsecurity.com/purchase) is fully programmed to handle calculations involving both the WEP and GPO provisions, so this couple should strongly consider using the software to explore and compare their options in order to determine the best strategy for maximizing their benefits.

Best, Jerry