Pension-eligible workers face complex Social Security rules that may reduce benefits. How to more accurately estimate retirement income

When
Joyce
Debnam’s
husband
passed
away,
she
began
receiving
$1,400
a
month
in
Social
Security

survivor
benefits.

Eight
months
later,
that
income
unexpectedly
changed.
The
trigger:
Debnam

retired
from
her
job
at
the
United
States
Postal
Service
in
2013
after
four
decades
of
service.

That
life
change
prompted
Debnam’s
Social
Security
benefits
to
be
cut
to
just
$174
a
month.
Moreover,
the
Social
Security
Administration
notified
her
she
had
to
return
$5,000
in
benefits
she
had
been

overpaid.

“When
I
got
that
letter,
I
almost
hit
the
floor,”
Debnam
said.

She
was
particularly
surprised
because
before
her
retirement,
Debnam
had
contacted
the
Social
Security
Administration
to
let
them
know
she
was
retiring
and
asked
whether
that
would
affect
her
monthly
checks.

“They
told
me
no,
that
I
was
eligible
for
retirement
and
I
would
get
my
money,”
Debnam
said.

Today,
Debnam,
80,
of
Suitland,
Maryland,
has
paid
back
the
$5,000
sum
and
relies
almost
exclusively
on
her
postal
pension
to
pay
bills,
which
means
her
other
retirement
goals
such
as
traveling
or
fixing
up
her
home
are
not
possible.

Debnam
is
one
of
millions
of
workers
who
is
affected
by

Social
Security
rules
related
to
public
workers
and
reductions
in
the
benefits
they
are
eligible
to
receive.

The

Windfall
Elimination
Provision,
or
WEP,
reduces
benefits
for
people
who
receive
a
pension
from
work
where
they
did
not
pay
into
Social
Security
and
also
had
fewer
than
30
years
of
substantial
employment
or
covered
employment.

About
two
million
people,
or
3%
of
Social
Security
beneficiaries,
were
affected
by
the
WEP
as
of
December
2022,
according
to
the

Congressional
Research
Service.

Another
rule,
the

Government
Pension
Offset,
or
GPO,
reduces
the
spousal,
widow
or
widowers’
benefits
for
people
who
also
receive
pensions
from
government
work
not
covered
by
Social
Security.

About
734,601
Social
Security
beneficiaries
were
affected
by
the
GPO
as
of
December
2022.

Like
Debnam,
many
workers
are
surprised
to
find
their
benefits
are
reduced
when
they
are
counting
on
that
income.

“These
policies
make
it
difficult
for
affected
workers
and
their
families
to
plan
for
retirement,”
Rep.
Mike
Carey,
R-Ohio,
said
during
a
recent

House
Ways
and
Means
subcommittee
hearing
on
the
rules
in
Baton
Rouge,
Louisiana.

“Far
too
often,
people
are
unaware
that
they
are
subject
to
the
WEP
or
GPO
until
their
spouse
retires,”
Carey
said.

This
prompts
some
people
to
return
to
work,
while
others
adjust
their
spending
habits
or
change
their
standard
of
living,
he
noted.

“Even
for
public
servants
who
are
aware
of
these
policies,
the
complexities
of
these
formulas
makes
it
difficult
to
determine
the
Social
Security
benefits
that
they
will
eventually
receive,”
Carey
said.

Congress
is
considering
ways
to
address
these
rules.
One
proposal,
the

Social
Security
Fairness
Act,
calls
for
eliminating
both
the
WEP
and
GPO
altogether.
The
bicameral,
bipartisan
bill
has
the
support
of
a
majority
of
House
lawmakers,
with
300
co-sponsors.

Professional
organizations,
such
as
the
American
Postal
Workers
Union,
and
others
representing
police,
firefighters
and
teachers,
support
the
change.

Experts
say
it
will
be
difficult
to
come
up
with
a
solution
that
compensates
workers
who
pay
into
Social
Security
for
their
entire
careers,
and
those
who
also
work
for
jobs
where
they
pay
into
a
pension,
equally.

For
now,
workers
who
are
affected
must
navigate
the
complicated
rules
to
plan
for
their
retirements.

Moreover,
they
may
be
affected
by
benefit
overpayments,
where
beneficiaries
receive
more
money
than
they
are
due
because
the
Social
Security
Administration
has
wrong
or
incomplete
information.

In
those
situations,
the
agency
requires
beneficiaries
to
pay
the
money
back.

Overpayments
of
retirement
benefits
mostly
affect
beneficiaries
of
state
and
local
governments
who
receive
noncovered
pensions,
Mark
Warshawsky,
senior
fellow
at
the
American
Enterprise
Institute
and
former
deputy
commissioner
for
retirement
and
disability
policy
at
the
Social
Security
Administration,

wrote
in
a
recent
op-ed.

The
agency
may
discover
a
pension
it
didn’t
know
existed
or
an
amount
of
pension
income
that
was
not
previously
reported.

“At
large,
the
way
to
prevent
it
from
happening
is
to
get
the
data
much
more
quickly,”
Warshawsky
said.

“It
would
be
nice
if
the
state
and
local
governments
provided
the
agency
with
the
data
on
the
retirement
benefit,
the
pension
benefit,
but
they
don’t,”
Warshawsky
said.

There
are
steps
beneficiaries
who
are
affected
by
these
rules
may
take
to
gauge
how
much
income
they
may
expect
in
retirement.

For
workers
with
five
or
more
years
of
noncovered
earnings,
the
Social
Security
Administration
provides
a
supplemental
fact
sheet
about
the
WEP
and
GPO
rules.

While
the
agency
does
not
calculate
the
altered
retirement
benefit
to
adjust
for
that
income,
individuals
can
do
it
themselves
through
tools
online,
including

WEP
and

GPO
calculators.

“We
recommend
that
people
review
their
Social
Security
Statement
at
least
once
every
year,
which
includes
important
information
about
WEP
and
GPO,”
a
Social
Security
spokeswoman
said
in
a
statement.

There
is
still
the
risk
that
information
may
be
overlooked,
or
the
wrong
data
may
be
transferred.
That
has
prompted
Laurence
Kotlikoff,
a
Social
Security
expert
and
Boston
University
economics
professor,
to
urge
beneficiaries
to
carefully
track
their
own
earnings
and
pension
benefit
information
and
cross
check
it
with
Social
Security’s
records.

In
the
event
Social
Security
beneficiaries
receive
an
overpayment
notice,
they
may
be
able
to
work
out
a
deal
for
a
partial
payment,
extended
period
of
payment
or
forgiveness
of
part
of
the
overpayment,
Warshawsky
noted.

“That
has
to
be
negotiated
on
a
one-off
basis,
for
each
person
individually,”
Warshawsky
said.