Q & A
I recently read a comment about Social Security and I want to know if it’s true…
Complete Question: Everyone is affected by the potential bankruptcy of Social Security – it’s all over the news. The disabled, the elderly, and those retiring in 20 years. I saw someone make a comment that I found disturbing. Since it was a comment that could have been posted by anyone and not necessarily an “expert”, I wanted to know if it was true. They said that federal employees can retire early and get a pension and then still get Social Security after only working 10 years. They were complaining because this takes a hit on the solvency of the trust fund. If this is true, I can see why they were complaining. But they didn’t provide any information to back it up – so is this right?
Answer: It is true, but it is in no way as simple as that person made it sound. Government employees who get a pension do not just get Social Security in addition to their pension – they have to earn it like everybody else.
First of all, the “10 years” refers to how many years of work are required to be eligible for Social Security benefits. This is true for anyone, regardless of whether or not they are a government employee. It also needs to be understood that while working in government jobs that are paying these pensions, the person is not paying Social Security taxes. However, the 10-year requirement applies to 10 years of working in a job that does require Social Security tax payments. Many times teachers are in this situation because they work part of the year for the government and supplement their income over the summer working in a different job. So that general statement may make it seem like they did not “earn” their Social Security benefits, but they did because they paid Social Security taxes through other jobs.
Another thing that is important to know is that people who are eligible for both a government pension and Social Security benefits are subject to a reduction in their Social Security benefits due to a law called the Windfall Elimination Provision (WEP). WEP looks at how much the retiree is receiving from a government pension and is eligible to receive from taxes paid into Social Security. What is key here is how many years are considered “substantial earnings”. Anything under 30 years results in a substantial reduction in the person’s Social Security benefit. If the retired government employee elects to receive spousal Social Security benefits, they will be affected by the Government Pension Offset (GPO), which is similar to WEP, but calculated differently. So either way, the person will receive a reduction in Social Security benefits.
So as you can see, regardless of when the government employee retires, they will only receive Social Security benefits if they paid into the system for the required 10-year minimum, and even then, they will receive a reduced benefit.