Should I Collect Survivor Benefits Early And Continue Teaching?

Jul 6 2019 - 9:58am

Hello Larry
I became a widow at the age of 33. My husband was only 37 when he died. I am currently a teacher in the state of Ohio and my question is about STRS and survivor benefits with SSA. Should I collect the survivor benefit early and continue to teach 5 more years until I am able to collect my pension? I am assuming once my pension begins my survivor benefit will be reduced to nothing being that my husband was only 37 when he passed.

Hi,

I'm sorry for your loss.

I'm not familiar with your teacher's pension plan, but I'll assume for purposes of my answer that you don't pay Social Security taxes on your wages. If that's true, then your Social Security survivor benefits will likely be at least partially offset once you start receiving your teacher's pension. That's due to the Government Pension Offset (GPO) provision (https://www.ssa.gov/pubs/EN-05-10007.pdf). The amount of the offset is equal to 2/3rds of the amount of your pension, so if the amount of your teacher's pension is at least 1.5 times as much as your survivor benefit rate then your Social Security survivor benefit would be offset to zero.

Your best strategy likely depends on the relative amounts of your Social Security survivor benefit and your teacher's pension, as well as the amount that you'll be earning. It may be wise to start drawing your survivor benefit early since the GPO offset won't start until you start drawing the teacher's pension, but if you're still working and you claim Social Security benefits prior to your full retirement age (FRA) your benefits could be subject to full or partial withholding as a result of Social Security's earnings test (https://www.ssa.gov/planners/retire/whileworking.html).

On the other hand, filing for survivor benefits prior to FRA will result in your benefit rate being reduced for age, which could make the difference between receiving no survivor benefits vs. some survivor benefits once your teacher's pension starts. For example, say Jane files for a widow's benefit at age 60. Jane's unreduced widow's rate if she waited until FRA to start drawing would be $1800, but her rate is reduced by 28.5% to $1287 in return for starting her benefits early. If Jane subsequently starts receiving a teacher's pension based on her wages that were exempt from Social Security taxes, her widow's benefits will be offset by 2/3rds of the amount of her teacher's pension. So, if for example Jane's teacher's pension was $2100, her widow's benefit of $1287 would be reduced by $1400 (i.e. 2/3rds of $2100) to zero. On the other hand, if Jane had waited until her FRA to receive an unreduced widow's benefit, then she would still be eligible for a partial widow's benefit of $400 (i.e. $1800 - $1400) per month in addition to her teacher's pension.

Our software (https://maximizemysocialsecurity.com/purchase) is fully programmed to handle GPO calculations as well as earnings test considerations, so you should strongly consider using the software to help you determine your optimal strategy for claiming your benefits.

Best, Jerry