You want to know how much you’ll get when you retire. You want to ensure you can retire comfortably.
You simply want to understand your Social Security. And you need to.
After all, you’re paying a percentage each paycheck into the Social Security trust. You should be aware of what that means for you.
Today, according to the Social Security Administration (SSA), three-fourths of state and local employees are covered by Social Security. You can apply for payments to help with expenses and offset the loss of income from your job.
Early Retirement, Social Security?
While you can retire at 62, payments are reduced. You can receive full benefits if you retire at 65, 66, 67, but it depends on when you were born.
However, Social Security is also facing hardships. A large number of baby boomers are retiring, so that younger employees may encounter a dwindling supply of funds in the Social Security trust when they eventually plan to retire. If the trust’s deficit is not fixed, you may see a reduced SS paycheck.
Social Security, combined with your own savings, TSP, and pension, is the foundation to secure retirement especially if you are enrolled in the Federal Employees Retirement System. But we can help you consider other options and financial products to bolster your retirement portfolio. We will look at how much you pay in to Social Security, and analyze when the best time to take it might be. Plan your financial future with us.
Are you covered?
Social Security and FERS
Social Security is one of the major income streams for retired federal workers enrolled in FERS.
FERS covers federal employees hired on or after Jan. 1, 1984, or those who switched over to FERS from the Civil Service Retirement System (CSRS). All federal employees who are enrolled in FERS pay Social Security taxes and earn Social Security benefits.
Social Security and CSRS
If you stayed under the CSRS program, you are not covered by Social Security, do not pay Social Security taxes or earn Social Security Benefits. You are, however, covered under the Medicare program and you pay Medicare taxes on your federal earnings.
The Bottom Line
You need to know what you’re going to get from Social Security in order to understand your total retirement income, especially if you’re enrolled in FERS.
Other Aspects of Social Security Benefits
There are some other nuances you need to know exist in order to best understand what you’re entitled to. These include the Windfall Elimination Provision and the Government Pension Offset.
Windfall Elimination Provision
What is the Windfall Elimination Provision?
Some federal employees may be eligible for pensions that are based on earnings not covered by Social Security. If you worked in a job where you didn’t pay Social Security taxes, the Windfall Elimination Provision affects the calculation of your social security income or disability benefits. Any pension you get from that job may reduce your Social Security benefits.
Your Social Security benefits are only intended to replace a percentage of your pre-retirement income. So if you’re already receiving a pension from your job, and you also worked in other jobs long enough to qualify for a Social Security retirement or disability benefit, the idea of WEP is to remove an advantage, in a sense, of receiving double benefits. The formula used is modified to pay out a lower Social Security benefit.
WEP may apply to you if you turned 62 years old as of 1985, you have become disabled after 1985 or if you first became eligible for a monthly federal pension based on work where you did not pay Social Security taxes after 1985, even if you are still working. There are several other provisions for qualifying for WEP. We can walk you through these facets of WEP, as well as navigate some other options.
Government Pension Offset
What is it?
Your spouse’s, widow’s or widower’s benefits through Social Security may be offset by two-thirds if you have a government pension where you did not pay Social Security taxes. Keep in mind, your own Social Security benefits will not be reduced, only the benefits that come from a spouse’s employment.
Before the Government Pension Offset was enacted, the SSA would have to pay out full Social Security benefits to a spouse even if that spouse earned their own monthly Social Security retirement benefit. Now with this provision, when it comes to determining the spouse’s benefits, workers who do not pay Social Security taxes are essentially treated in a similar manner to those who work in the private sector and pay Social Security taxes.
There are a handful of provisions in which your spouse’s benefits will not be reduced, including if your spouse is receiving a government pension not based on their earnings. More about these exceptions can be found at the SSA’s fact sheet on Government Pension Offset. You can also contact one of our benefits specialists to learn more about your Social Security benefits.
- Supplemental Security Income (SSI) Resources
- Social Security Program Rules
- Summary of the 2014 Annual Reports from the Social Security and Medicare Boards of Trustees
- Social Security Resources from AARP
- Social Security 101: What’s in it for me?
- Can You Count on Social Security?
- How to Get the Most from Your Social Security Benefit
- CSRS vs. FERS