How Do I Find The Best Way To Receive SS And Teacher's Retirement?

Jan 17 2019 - 9:48am

How do I find the best way to receive SS and my unprotected teacher retirement? I am about to turn 66 and I work full time paying SS at my current job.
I plan to file a restricted application to receive the 50% of my ex-husband's SS, and file for my own SS at age 70. The question I have is about my small teacher retirement from when I taught for 12 years and that was about 20 years ago - I can start taking the monthly amount but it was untaxed so I don't want my SS to have the GPO. But I'm not sure what to do to minimize WEP when I do start my teacher retirement at 70. I have the option at 70 to receive $1300 mo for life AND a payment of approx $135k (the amount I didn't take from age 60-70) - will WEP take a % if the payout amount? OR I could have a lifetime monthly amount $1,900 and no payment. I wanted the payment option because I would like to buy a house. Currently I rent. At 70 my SS would be $2400 month, but because of my teacher retirement, it will be less from WEP reduction. I am so confused and not sure if there is a way to receive the $1300 monthly teacher retirement and have the payout part in a Roth or sine investment so I have less tax penalty. Please advise!

Hi,

If you're trying to decide the best strategy for claiming your benefits you should strongly consider using our software. Our software can handle both the WEP (Windfall Elimination Provision) and GPO (Government Pension Offset) provisions, so it should be particularly helpful to you. It sounds like you would be a good candidate for our Maxifi software (https://maxifiplanner.com/retirement-planning-maxifi).

To start with, the WEP provision only affects Social Security retirement or disability benefits payable on your own record. GPO only affects benefits payable on another person's Social Security record, such as divorced spousal or survivor benefits. If you file for divorced spousal benefits and you later end up claiming a teacher's pension that would retroactively pay you benefits for the same period of time that you received divorced spousal benefits, I believe that GPO could be applied retroactively, potentially resulting in an overpayment that you would be asked to repay. I would suggest checking with Social Security to clarify that, however. Their operations manual states that GPO applies for the month the pension is payable for, not the month the spouse actually receives the payment (https://secure.ssa.gov/apps10/poms.nsf/lnx/0202608100). But, there are special rules regarding lump sum payments in lieu of a pension. The actual manner in which GPO would potentially be applied in your case would depend on the specific provisions of your pension plan.

It sounds like WEP would almost certainly apply to your Social Security retirement benefits, though, and the WEP reduction amount would be the same whether your monthly rate is $1300 or $1900. Either of those amounts would be high enough to cause the amount of your WEP reduction to be based on the alternate WEP calculation formula as opposed to the WEP guarantee provision (https://www.ssa.gov/pubs/EN-05-10045.pdf). Our software could tell you how much the WEP reduction would likely amount to in your case.

Best, Jerry