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September 25, 2018
Full SS fact sheet
Posted On: May 12, 2010

Social Security information outline

 

There are several concerns/facts that need to be researched to understand what is best for each individual. These are all that I have come up with.

 

If you decide to vote out of Social Security you will receive 6.2% of your wages for the last 3 years 3 months and 14 days in back pay. This money has already been taxed, so the government can’t tax it again. The city or district you work for that has paid the other 6.2% will receive that money in back pay upon request from the city/district. If in your contract or an MOU you get all or a portion of that money it would need to be tax sheltered or that money would be taxed as income. Most of you already know about the case law involving the employer’s portion being deemed to go to the employee, but maybe worth mentioning. Medicare is discussed later in this document.

 

Windfall elimination provision

To understand WEP you must first understand how to calculate your benefit. SS uses something called the AIME formula to calculate your benefit. SS takes your highest 35 years of earnings and puts them into this formula, and it spits out a number which is your base or AIME number they then put this number into the second formula. If you don’t pay into SS you get zero’s which affect that number. Let’s say your AIME formula number is $2500.

 

90% of first $680                                                 $612

32% of the next $3420                              $582          

15% of the remainder                                            $0

                                                                              Total $1194

 

In the WEP formula it looks like this.

40% of first $680                                                  $272

32% of the next $3420                              $580                      

15% of remainder                                                  $0

                                                                               Total $854

Your maximum reduction in any circumstance will be $340 due to WEP.

 

If you have had over 30 years of substantial earnings WEP does not apply. If you have 21-29 years of substantial earnings you are in a modified WEP listed below. That number would replace the 40% listed above.

Years of substantial earnings Percentage

30 or more                              90 percent

29                                             85 percent

28                                             80 percent

27                                             75 percent

26                                            70 percent

25                                            65 percent

24                                            60 percent

23                                            55 percent

22                                             50 percent

21                                             45 percent

20 or less                                40 percent

If you get a relatively low pension, you are protected. The reduction in your Social Security benefit cannot be more than one-half of that part of your pension based on your earnings after 1956 from which Social Security taxes were not deducted.

 

Government Pension Offset/Dual entitlement

Non GPO

Generally, Social Security benefits are payable to the spouses of retired,

disabled, or deceased workers covered by Social Security. Spousal benefits are

intended for individuals who are financially dependent on spouses who work in

Social Security-covered positions. Individuals who qualify for both a Social Security

worker benefit (retirement or disability) based on their own work history and a Social

Security spousal benefit based on their spouse’s work history are “dually-entitled”

and are subject to the dual-entitlement rule. The Social Security dual-entitlement rule

requires that 100% of a Social Security retirement or disability benefit earned as a

worker (based on one’s own Social Security-covered earnings) be subtracted from

any Social Security spousal benefit one is eligible to receive (based on their spouse’s

Social Security-covered earnings), and only the difference, if any, is paid as a spousal

benefit.

            Regular Dual-Entitlement Formula

                                                                                                                                 John           Mary

Social Security retirement benefit (based on worker’s earnings

record)                                                                                                                     $900.00        $400.00

 

Maximum Social Security spousal benefit eligible to receive (based

on spouse’s earnings record), equal to 50% of the spouse’s Social

Security retirement benefit                                                                                      $200.00        $450.00

 

Reduction in spousal benefit due to dual-entitlement rule (equal to

worker’s own retirement benefit)                                                                            $900.00        $400.00

 

Actual Social Security SPOUSAL benefit paid (subtract worker

benefit from spousal benefit)                                                                                   $0.00             $50.00

 

GPO

Individuals who qualify for both a government pension based on non-Social

Security-covered employment and a Social Security spousal benefit are subject to the

Government Pension Offset (GPO) provision. The GPO provision reduces Social

Security benefits that a person receives as a spouse if he or she also has a federal,

state or local government pension based on work that was not covered by Social

Security. The GPO reduction in Social Security spousal benefits is equal to two thirds

of the government pension.

 

 

 

 

 

 

 

GPO Formula

                                                                                                                     John            Mary

Social Security retirement benefit (based on worker’s earnings record)    $900.00        $0.00

 

Non-Social Security-covered government pension                                     $0.00            $400.00

 

 

 

Maximum Social Security spousal benefit eligible to receive (based on

spouse’s earnings record), equal to 50%of the spouse’s Social Security

retirement benefit                                                                                         $0.00            $450.00

 

Reduction in Social Security spousal benefit due to GPO (equals 2/3 of

non-Social Security-covered pension)                                                          $0.00           $266.67

 

Actual Social Security spousal benefit paid (subtract 2/3 of non-Social

Security-covered worker’s pension from Social Security spousal

benefit)                                                                                                          $0.00           $183.33

 

 

 

 

Disability

The definition of disability under Social Security is different than other programs. Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability.

"Disability" under Social Security is based on your inability to work. We consider you disabled under Social Security rules if:

  • You cannot do work that you did before;
  • We decide that you cannot adjust to other work because of your medical condition(s); and
  • Your disability has lasted or is expected to last for at least one year or to result in death.

The number of work credits needed for disability benefits depends on your age when you become disabled. Generally you need 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits. 40 credits = 10 years of substantial income. You can earn up to 4 credits a year.

 

 

 

 

 

 

 

 

Amount of earnings needed to earn one quarter of coverage

 

Year

Earnings

1978

$250

1979

260

1980

290

1981

310

1982

340

1983

370

1984

390

1985

410

1986

440

1987

460

1988

470

1989

500

1990

520

1991

540

1992

570

Year

Earnings

1993

$590

1994

620

1995

630

1996

640

1997

670

1998

700

1999

740

2000

780

2001

830

2002

870

2003

890

2004

900

2005

920

2006

970

2007

1,000

Year

Earnings

2008

$1,050

2009

1,090

2010

1,120

 

 

Survivor benefits

Dependant benefits are not changed by WEP or GPO. They would be affected by how much you put into SS. As you work and pay Social Security taxes, you earn credits toward your Social Security benefits. The number of years you need to work for your family to be eligible for Social Security survivors benefits depends on your age when you die. The younger you are, the fewer years you need to work. But no one needs more than 10 years of work to be eligible for any Social Security benefit. There is a one-time payment of $255 that can be made when you die if you have worked long enough. This payment can be made only to your spouse or child if they meet certain requirements. For more specific information see this site on SS http://www.socialsecurity.gov/survivorplan/onyourown5.htm

 

Medicare

Medicare is not affected if you were hired at your department after April 1st 1986. However, if you were hired before that date You will be forced out of Medicare with social security. As long as you have paid into SS/Medicare for 10 years/40 quarters of substantial income you will not lose the Medicare benefit and you will receive back pay on the 1.45% paid for the previous 3 years 3 months and 14 days.

 

Persi

Your PERSI retirement is not affected by your decision to stay in or vote out of SS.

 

 

 

Retirees

The Social Security office stated that if you are retired and collecting benefits those individuals are not affected.

 

 

 

 

 

 

 

 

 

 


 
 
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