Q & A
How does a second career in teaching affect my Social Security?
Full Question: I am 58 years old. I have worked all my life (almost 40 years) at a fairly high-paying job. I recently retired. I’m thinking of taking a teaching job for the next 5 years or so. But here is the catch: The teaching job is in California, where teachers do not pay into Social Security. I have been told that if I take that job, I will jeopardize my future Social Security benefits in two ways: 1) My own Social Security benefit will be reduced because of the small teacher’s pension I will get; and 2) I will never be able to get any survivor’s benefits from my wife’s Social Security account, if she predeceases me. What can you tell me about this?
Answer: I can tell you to take the teaching job. You will not mess up your Social Security benefits in any way. Those who warned you not to take the job were thinking about a couple of pension offsets that will not impact you.
One of those offsets is called the Windfall Elimination Provision. It will reduce Social Security benefits for folks who spend the bulk of their careers in jobs not covered by Social Security, but have worked enough under Social Security to qualify for some benefits. But you did just the opposite. You spent the bulk of your career in a job that was covered by Social Security. And the law says that if you have 30 years of “substantial” Social Security earnings, the WEP will not apply to you.
The other offset, called the Government Pension Offset, could eliminate benefits you are due on a spouse’s record. But here is the point: Your own Social Security benefit already prevents you from getting anything on your wife’s account. So if you end up with a small teacher’s pension, it won’t change anything.
Source: Tom Margenau, Spectrum Online – February 17, 2014
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I was a Military Soldier for 25yrs and retired at 54. Currently teaching in California as a High school teacher with 5years towards retirement. I will have 10 years when I turn 65. Which I can retire as a teacher, how does this work with me still receiving my Social Security once I reach full retirement age of 67. Should I stop now as a teacher and work for my Social Secruity or stay with the Teachers for the next 5years.?
Whats my best deal in California?
Don
Donald,
If you will have a teacher’s pension from the state of California – a pension earned without contributing to Social Security – your Social Security retirement benefit, when you claim it, will be reduced by a rule called the Windfall Elimination Provision, or “WEP.” WEP will reduce your SS retirement benefit by something on the order of $600+/month (the exact WEP reduction for your SS eligibility year isn’t yet published), or 50% of your CA teacher’s pension, whichever is less. If you have a relatively small CA teacher’s pension based on only ten years teaching, half of that will likely be the WEP reduction amount to your Social Security benefit.
Without knowing your SS benefit or your CA teacher’s pension amounts, I cannot opine whether you should continue teaching or seek other employment wherein you and your employer both contribute to Social Security. You will need to make that judgement while considering that your CA teacher’s pension (if/when you take it) will cause WEP to reduced your Social Security benefit (likely by 50% of your CA teachers pension).
You could, of course, forfeit your CA teacher’s pension by withdrawing all monies you have personally contributed to it prior to retiring, which would mean that, with no CA teacher’s pension WEP would not apply to your Social Security benefit. But again, that’s a judgement you would need to personally make, while considering which provides the best financial outcome – collecting your full (unreduced) SS benefit, or collecting both a reduced SS benefit and a CA teacher’s pension.
Sorry I can’t be more specific with this Donald, but I’m afraid it’s a decision only you can make while considering your potential SS and CA pension amounts, and the WEP consequences which will occur if you take your CA teacher’s pension. If you have more questions, please contact us directly at [email protected], or call us at 1.888.750.2622.
Russell Gloor
National Social Security Advisor
The AMAC Foundation
I am 65 years old, and have been receiving Social Security benefits since I was 62. I have worked and paid taxes all my life.
If I now take a teaching position, will i lose my benefits, or have them reduced in any way? I’m in KY.
Donna,
At age 65, you have not yet reached your SS full retirement age (FRA), which means that if you work while collecting early SS benefits you’ll be subject to Social Security’s “earnings test.” The earnings test limits how much you can earn before they take away some of your Social Security benefits. The earnings limit for 2024 is $22,320 and if that is exceeded you will lose $1 of SS benefit for every $2 you are over the limit (half of what you exceed the limit by). The earnings limit changes every year (for 2023 it is $21,240), but goes away once you reach your full retirement age. If you were born in 1958, your FRA is 66 years and 8 months. Also, the earnings limit in the year you reach FRA is about 2.5 times higher than the standard limit for that year and the penalty for exceeding it is less ($1 for every $3 over the FRA-year limit). In any case, working while collecting early SS benefits will impact your SS benefits if the annual earnings limit is exceeded. The wisest thing to do would be to inform Social Security that you are returning to work and what your income will be, so they can withhold your SS benefit payments as long as necessary to avoid overpaying you (if you don’t inform them in advance, they will catch up when the IRS reports your work income to SSA).
Another thing to be aware of: Kentucky is one of 27 states where many state employees (including teachers) do not pay into Social Security. If you eventually earn a KY teacher’s retirement pension, earned without contributing to Social Security, when you start receiving that KY pension your Social Security will be reduced by the Windfall Elimination Provision (WEP). Also, if you are entitled to a spousal benefit, the Government Pension Offset (GPO) will result in a cut in that portion of your SS benefit. So, earning a teacher’s pension in KY without contributing to Social Security will have an effect on your Social Security benefits when you start receiving a KY pension. Important for you to be aware of WEP and GPO if you will earn a KY state teacher’s pension.
So, Donna, I hope this answers your question, but if you need any further information please email us at [email protected], or call us at 1.888.750.2622.
Russell Gloor
National Social Security Advisor
The AMAC Foundation
Does this apply in Texas as well?
Allison,
The two provisions discussed in the referenced article – the Windfall Elimination Provision and the Government Pension Offset – both do apply to teachers in Texas. The Windfall Elimination Provision (WEP) affects your personal Social Security retirement benefits, and the Government Pension Offset (GPO) affects any spousal or survivor benefits you may be entitled to as a spouse. If you have a Texas teacher’s pension, both of those provisions will apply. For more information, or to see how you might personally be affected by these provisions, pleased email us at [email protected], or call us directly at 1.888.750.2622.
Russell Gloor
National Social Security Advisor
The AMAC Foundation