Should I quit my teaching job?
I am waiting until I turn 70 to start taking Social Security. This will happen in May of 2020. SSA estimates I'll get about $3,350 per month then. I have not worked at a job with FICA contributions for about 7 years. I have been working and continue to work part-time teaching at a community college (no FICA contributions). I'm vested in what they call their STRS Cash Balance Plan through this employment. The account balance is about $25,000. I'm worried what that plan and WEP and GPO will do to my monthly Social Security check that will start in 2020.
I am married. My wife was a teacher and gets a pension of about $2,100 per month from CALSTRS. She's 70 and does not get Social Security.
Should I quit my part-time teaching job and take a lump sum from the STRS Cash Balance account before I start taking Social Security? I enjoy teaching and don't need the income, but should I give up teaching completely so that going forward WEP and GPO won't decrease my Social Security check? Or maybe I could continue to teach, but make no further contributions to the STRS Cash Balance Plan?
Thank you so much for your help!
I can't advise you whether or not you should stop working or what you should do with regard to your STRS plan, but taking a lump sum would likely not exempt you from the Windfall Elimination Provision (WEP). Lump sum distributions from a retirement plan based on work and earnings that were exempt from Social Security are usually prorated into a monthly rate for WEP purposes.
However, if you have at least 30 years of Social Security covered 'substantial earnings' as that term is defined for WEP, then you would be exempt from any WEP reduction. Even if you don't have 30 years of substantial earnings, though, the amount of WEP reduction could be lessened if you have between 20 and 30 years of substantial earnings. For more information on the substantial earnings exception to WEP, refer to the following Social Security publication: https://www.ssa.gov/pubs/EN-05-10045.pdf.
The Government Pension Offset (GPO) provision only affects auxiliary and survivor benefits (e.g. spousal, widows), so GPO won't impact your benefits. However, it sounds like your wife's potential spousal and/or widow's benefits would at least be reduced due to GPO. That wouldn't have anything to do with your STRS plan, but instead would be caused by her CALSTRS pension (https://www.ssa.gov/pubs/EN-05-10045.pdf).
Our software (https://maximizemysocialsecurity.com/purchase) is fully programmed to handle the WEP and GPO (Government Pension Offset) provision, so you and your wife may want to consider using the software to determine what if any effect your STRS distributions may have on your benefits, as well as how GPO may affect your wife's potential eligibility for spousal and benefits.