Question about my wife's state pension and WEP - how much will it cost her on social security? (55, supplement)

[nicet4]

For most of her life she had the tougher job and that is staying at home raising wonderful, productive children. I am happy to report she did a super fantastic job!

Honestly, I had the easier job... I just went to work every day where she worked 24/7/365.

After high school she worked about 8 years as an office worker and when children came she quit for 20 years but then she found a job at the local library she just loved and worked there for exactly 10 years and 3 days... with 10 years she was eligible for state retirement benefits that she could start collecting at age 60.

It wasn't about the money it was about the health insurance that came with it at age 60. You know the drill, between age 60 and 65 we were both covered by her state pension retirement plan for health insurance and it was a super great plan, that included dental and eyes, that cost us $605/month. Go ahead, try to buy this one your own for two people over 60 for $605/month.

She was ready to "retire" after eight years but looking at the retirement benefits, mostly at the health benefits, she stuck it out for two years to make it work.

Today she is on Medicare so the state insurance became secondary and so far it's a fantastic secondary that she pays a little for but it is far cheaper than if she bought it on her own.

My question is how much will this cost her out of her social security which will be 50% of my FRA benefit which will be $1,125?/month? Her ss will be calculated on 50% of mine because on her own she's entitled to something around $650 based on her record alone.

[MadManofBethesda]

It's still early in the morning and I haven't had a lot of coffee yet, but if I've read your post correctly, you're actually concerned with how the Government Pension Offset provision (GPO) of Social Security affects your wife's spousal benefit and not the Windfall Elimination Provision (WEP) which pertains to her own work history under Social Security.

Assuming the $3,684 in the 1099 is your wife's pension for a full-year, her spousal social security benefit would be reduced by 2/3 of that amount ($2,463), which works out to approximately. $205 per month. So, since you stated that her full unreduced spousal benefit would be $1,125, her GPO-reduced benefit would come to $910.

Again, I haven't had much coffee yet and I haven't double-checked my figures, so my math could be off. If so, I'm sure someone will correct me.

[nicet4]

Originally Posted by MadManofBethesda

It's still early in the morning and I haven't had a lot of coffee yet, but if I've read your post correctly, you're actually concerned with how the Government Pension Offset provision (GPO) of Social Security affects your wife's spousal benefit and not the Windfall Elimination Provision (WEP) which pertains to her own work history under Social Security.

Assuming the $3,684 in the 1099 is your wife's pension for a full-year, her spousal social security benefit would be reduced by 2/3 of that amount ($2,463), which works out to approximately. $205 per month. So, since you stated that her full unreduced spousal benefit would be $1,125, her GPO-reduced benefit would come to $910.

Again, I haven't had much coffee yet and I haven't double-checked my figures, so my math could be off. If so, I'm sure someone will correct me.

Thank you, I was trying to make sense out of it applying WEP and obviously had trouble. Didn't know about the GPO. Learn something new every day!

Of course I don't like it but I got to admit it's fair.

What isn't reflected in the 1099R the money that is used to subsidize her Medicare Advantage Plan that she has and the "reimbursement" (that is the term they used) for her Medicare Part B. My understanding is the state stopped reimbursements for Part B for new hires but when she signed on she got under the wire and there you go.

Her Part B reimbursement is not $104.90 but a little less.. I seem to remember it being just a little over $93.50 which was the cost of Part B in 2007 when she retired. As far as I can tell that $93.50 doesn't show up on her 1099R. I'm cool with that!

What surprises me, and it probably shouldn't, is the cost of medical in retirement. Oh, I am not complaining, far cheaper than anything else for the under 65 crowd, but I don't think a lot of people understand that medical for two people can easily be $600 to $800 monthly when you add it all up.

In round numbers $105 (Part A)+$155 (Supplement)+$30 (Part D)+$35 (dental)*2=$650 for two so we're pretty happy with the way her pension offsets a lot of that for her.

[loves2read]

We have similar arrangement as you and your wife. I was a teacher prior to being stay at home mom. Then when my husband was laid off in late 80s I went back to work, for the longest time with the state as caseworker in HEalth/Human Services and then went back into teaching. I was able to repay the money withdrawn from my initial teaching and state employment and add that money and state years into my teacher retirement account. The best advice I received was to buy 3 additional years of service so it all added up to 20 vested years--made all the difference in early retirement and being able to retire sooner and protect my spousal SS from the govt offset. There used to be a workaround but it was phased out just after I retired.
My own SS will be penalized so much by my teacher's pension I will never draw on it...so I don't feel guilty about protecting my spousal portion.
We used my insurance though teacher retirement before Medicare and it is our Medigap and Part D RX which is better. Than Medicare plans since there is no donut hole to worry about.
Just hope my state starts paying its fair share of the shortfall in my retirement plan.