When giving presentations at schools, one of the first questions I ask teachers is whether or not they are contributing to Social Security. A pop-quiz! Many often say yes or they don’t know. Texas is one of 15 states where public school educators typically do not participate in Social Security. We do, however, have a pension available to us — the Teacher Retirement System of Texas (TRS). For those of us who are vested in TRS, meaning you have a least 5 years of service, are eligible for a pension upon retirement. If you ALSO qualify for Social Security, how your benefit is calculated may be affected by TRS.
DO YOU QUALIFY FOR SOCIAL SECURITY BENEFITS?
You may be able to collect social security benefits if you’ve earned at least 40 credits on your own or based on your spouse’s work history. This is in addition to established eligibility based on citizenship or lawful immigration status.
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Your own work history. You need to have earned 4 credits per year over the course of ten years to be eligible for Social Security benefits. If you contributed to Social Security before or after your time in education, you may be eligible. You can double check by signing in to your Social Security account online. https://www.ssa.gov/mysocialsecurity
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Your spouse’s work history. You may be eligible for 50% of your spouse’s benefit at their full retirement age (FRA) if it is higher than yours. Either, or — not both.
WILL MY BENEFIT BE REDUCED OR ELIMINATED?
IF YOU’RE ELIGIBLE FOR A (TRS) PENSION, READ ON.
Social Security made changes to the Social Security Act that keep individuals from receiving both a social security benefit and a pension for work where they did not pay in to the Social Security System. In other words, if you qualify/ied for a pension AND did not pay into Social Security at that employer, these provisions could reduce or eliminate your Social Security Benefits. These provisions are the Windfall Elimination Provision and the Government Pension Offset.
WINDFALL ELIMINATION PROVISION (WEP)
YOU QUALIFY FOR SOCIAL SECURITY BASED ON YOUR OWN WORK HISTORY AND ARE ELIGIBLE FOR A PENSION.
- Your Social Security Benefit is based on your average monthly earnings and is made of three factors to calculate your full Primary Insurance Amount (PIA). WEP only impacts the section in GREEN below or the first $926 of your average monthly earnings.
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The maximum reduction will never be greater than 1/2 your pension amount. The max monthly reduction in 2019 is $463, 50% of the first $926 of your benefit.
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If you have more than 20 years of substantial earnings, the reduction decreases. If you paid Social Security tax on 30 years of substantial earnings, you are not affected by WEP.
To get an idea how your benefits will be reduced, you will need a copy of your Social Security statement and an estimate of what you can expect your pension to be.
WEP Calculator https://www.ssa.gov/planners/retire/anyPiaWepjs04.html
GOVERNMENT PENSION OFFSET (GPO)
YOU QUALIFY FOR SOCIAL SECURITY BASED ON YOUR SPOUSE’S WORK HISTORY AND ARE ELIGIBLE FOR A PENSION.
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Your Social Security survivor or spousal benefit will be reduced by 2/3 of your TRS pension.
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If 2/3 of your pension exceeds your spousal benefit, you will not receive a spouse’s or widow’s Social Security benefit.
GPO Calculator https://www.ssa.gov/planners/retire/gpo-calc.html
IT’S COMPLICATED
If you’re reading this page, my guess is that you think you may be subject to one of these provisions. I likely will be as well! I don’t expect you to be a pro at it. Why don’t you bring in your Social Security statement and we can take a look together.
LET’S MAKE A PLAN!
I know that you’re busy and it’s not always easy to make sense of your personal finances. There is no substitute for having a plan. Whether you’re just starting out or interested in learning more, I am happy to be a resource along the way.
Schedule a Meeting: In person or virtual
Jesse is a graduate of the University of Notre Dame and earned his Master’s in Education from Harvard. In his education career, he served as a teacher, counselor and Director of Alumni for YES Prep Public Schools. He is a member of the Teacher Retirement System of Texas (TRS) and takes pride in helping fellow educators better understand their pension and plan for their future. Learn more about Jesse.