Common Social Security Mistake Made by Teachers (And Government Employees)

Teachers (and Government Employees)—Don’t Make This Social Security Mistake

Teachers, you work extremely hard for our children and to make this world a better place.  You may have had another career prior to becoming a teacher and have earned enough credits to receive some retirement benefits on your own record; or, maybe you are receiving benefits based on your spouse’s record. As a result, you may be entitled to Social Security benefits.  PLEASE BE AWARE if you are also receiving benefits under CalSTRS (CalPERS if you are a California government employee), then Social Security may apply either or both of the following to your Social Security benefit: Windfall Elimination Provision or Government Pension Offset.

The Windfall Elimination Provision can affect your Social Security benefits when you work for an employer who doesn’t withhold Social Security taxes from your salary (e.g., federal, state and local government agencies/employers).  The reasoning is that Social Security retirement was only intended to replace some of your pre-retirement earnings, and you should not get a double benefit from both a government pension and Social Security. Social Security will apply a formula to determine if and how much your Social Security benefit should be reduced if the Windfall Elimination Provision applies to you.

The Government Pension Offset can impact Social Security benefits if you are entitled to them as a spouse, widow, or widower.  It is similar to the Windfall Elimination Provision in that if you receive a retirement or disability pension from a federal, state, or local government based on your own work for which you didn’t pay Social Security taxes, Social Security may reduce your Social Security spouses or widow’s or widower’s benefits.

Problems often arise when you fail to inform Social Security about your government pension and when you start taking it.  For example, you can receive Social Security widow’s or widower’s benefits while you are still teaching without any kind of offset; however, as soon as you retire, you must inform Social Security you have started receiving your pension from CalSTERS.  If you fail to inform Social Security about taking your CalSTERS pension and Social Security continues to pay you the full benefit you were receiving while working, then you are accruing an overpayment.  An overpayment is exactly what it sounds like—Social Security overpaid you, and they want to be paid back.  You can imagine that if this goes on for months or even years, you may have a big bill to pay to Social Security and there is usually no way around paying Social Security back.

As a teacher or any government employee who also receives Social Security benefits, please inform Social Security whenever there is a change in your government pension (e.g., you begin taking it, it increases/decreases, etc.). Remember, Social Security places this duty to inform on you—when in doubt, make an appointment with your local Social Security branch to get your questions answered.

To discuss this and other estate planning needs, contact us today.

All materials have been prepared for general information purposes only to permit you to learn more about our firm, our services, and the experience of our attorneys. The information presented is not legal advice, is not to be acted on as such, and may be subject to change without notice.

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