Ask The Experts: Retirement

By Reg Jones

Drawing from spouse’s retirement

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Q. I retired from CSRS on disability. I have my 40 quarters. My wife is retired from Social Security. Can I draw from her account at age 62?

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Post-1956 deposit

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Q. The following statement was made in an answer to a question ask about post-1956 deposit: “You can’t get a refund of the deposit you made for your active-duty service. What’s done is done. If you retire at age 62 and aren’t eligible for a Social Security benefit at that time, you’ll never have to worry about losing those years and having your annuity recomputed.”

I will retire at age 60 and have paid in a post-1956 deposit. I am in CSRS and will have 41 years and eight months with the post-56 deposit (eight years, six months of military service). I have worked for 40 quarters and am eligible for Social Security (military service and work prior to the military). However, due to the windfall elimination provision, I do not plan to ask for Social Security benefits until I am 65 or older. Will my annuity be recomputed after I reach 62 even though I have no intention of requesting my Social Security benefit until 65 or 70? Can I expect some kind of reduction in my annuity? I understand my Social Security benefit will be reduced by two-thirds once I apply for it.

A. Because you made a deposit for your active-duty service, you’ll not only get credit for that time in your annuity computation but your CSRS annuity won’t be affected no matter when you apply for a Social Security benefit. However, as you noted, your Social Security benefit will be reduced because of the windfall elimination provision. That’s because you will be receiving an annuity from a retirement system where you didn’t pay Social Security taxes and have fewer than 30 years of substantial earnings under Social Security.

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Social Security credits

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Q. I am a CSRS employee who has worked for the government for 40 years. I also have 27 credits for Social Security. I work for my husband as an accountant for free. If I start charging him and take payments under a 1099, how many credits do I have to earn to get Social Security payments on top of my CSRS benefit when retire?

A. In 2013, you’d need to earn $1,160 to get one Social Security credit, $4,640 to earn four credits. It would take you over three years to collect the 40 credits you’d need to be entitled to a Social Security benefit.

Note: If you do become entitled to a Social Security benefit, you’ll be subject to the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity from a retirement system, like CSRS, where he or she didn’t pay Social Security taxes.

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WEP

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Q. I paid Social Security tax on my “SS statement earnings record,” from 1963 to 1974, and in 1985. I have 27 out of the 40 credits. My retirement number is 66 (I will turn 66 in August). I am still employed. Will I be eligible for Social Security retirement pay (no windfall elimination provision), even though still employed through this year?

A. I’m assuming that you are a CSRS employee. If so, you are subject to the windfall elimination provision. However, since you don’t have 40 credits under Social Security, you won’t be eligible for a Social Security benefit. If you earn enough credits to qualify for a Social Security benefit, it will be subject to the WEP, regardless of your age.

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Postal Service work and Social Security

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Q. I am 62 and a U.S. Postal Service retiree. I retired five years ago after 38 years of service. I receive a CSRS pension. During the time I worked at the Post Office, I also worked some part-time jobs, for which I contributed to Social Security. After I retired, I continued to work these part-time jobs, trying to get enough quarters to be able to collect a small Social Security pension when I reached age 62. In April, I turned 62 and applied for Social Security. The Social Security representative told me that I was eligible to collect $184 a month, but because I had worked for the Post Office and was collecting a federal pension, my Social Security pension would be reduced. He said under the windfall elimination provision, my Social Security pension would be reduced from $184 to $80 a month. That’s a reduction of $104 . I was aware of the WEP, but I never thought I would receive such a large reduction! I filed an appeal in April, but I have not received an answer yet. I called them, but I was told they have up to four months to rule on my appeal. I’m still waiting. I just don’t think they’re being fair. Am I wrong to feel like I’m being punished because I worked for the Post Office? I busted my tail working these part-time jobs to qualify for $184 a month, and I know I should receive a reduction, but not $104.

A. If you had fewer than 30 years of substantial earnings under Social Security, you’d be subject to the windfall elimination provision. The fewer years of covered service you have, the greater the decrease in your Social Security benefit will be. The reduction is effected by reducing the first multiplier in the Social Security benefit formula. If your have 30 or more years, that multiplier is 90 percent. If you have 20 or fewer years, the multiplier is reduced to 40 percent. To better understand the WEP, go to www.socialsecurity.gov/pubs/10045.pdf.

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Windfall elimination provision

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Q. I am 68 and retired from the federal government. My annuity payment is around $53,000 a year before taxes. I have 37 quarters.

The organization in which I worked most of my life didn’t participate in Social Security. We had our own pension plan, thus my 37 quarters.

How much would my monthly Social Security payment be had I earned 40 quarters?

I am not sure if I fall under the windfall elimination provision. How will I be affected? Will my SS check be based on how much I paid into the system? My first 20 quarters were earned when I was young and not making much money. The last 17 were in the last few years, when I was earning the maximum.

A. If you earned three more credits, you’d be entitled to a Social Security benefit. However, that benefit would be subject to the windfall elimination provision, which would reduce — but not eliminate — that benefit. To get a better idea of what your benefit might be if you had 40 credits, go to www.socialsecurity.gov/retire2/anyPiaWepjs04.htm or use SSA’s online calculator.

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