social security

[FlyingRon]

First off, 57 years is immaterial in the calculation. The benefit calculation only takes your 35 highest paid years. Your salary is only counted up to the maximum SS taxable amount (2017 was 127,200). Earlier contributions are scaled for "inflation."

As pointed out, it's not an IRA. Essentially, these are insurance premiums (at least if you make it to retirement age, you get some payout).

 

[Pinkie39]

Well, I paid into Social Security for 24 years, before starting my current government job at 40. I now pay into the Ohio public employees retirement system in lieu of Social Security.

So, when or if I retire, my Social Security benefit will be either greatly reduced or eliminated, because I'll have a government employee pension. It's called the Windfall Elimination Provision. How's that for "fair"?

And if my husband outlives me, any Social Security survivor's benefits he may be eligible to collect will also be reduced, due to my government job.

 

[Janke]

Well, I paid into Social Security for 24 years, before starting my current government job at 40. I now pay into the Ohio public employees retirement system in lieu of Social Security.

So, when or if I retire, my Social Security benefit will be either greatly reduced or eliminated, because I'll have a government employee pension. It's called the Windfall Elimination Provision. How's that for "fair"?

And if my husband outlives me, any Social Security survivor's benefits he may be eligible to collect will also be reduced, due to my government job.

 

[Janke]

1. WEP (Windfall Elimination Provision) exists because the first S in Social Security is Social. There is a bit of income redistribution inherent in computing Social Security benefits. Computation of benefits is based on highest 35 years of lifetime earnings. If you were an NBA basketball player in your 20's but got injured and had no other skills, your highest earning years may be the early ones, not the late ones. So all years matter.

In the PIA comp, "Bend Points" are used in order to give more economic weight to the lowest tier (like a wedding cake) of Average Indexed Lifetime Earnings (AIME). https://www.ssa.gov/OACT/COLA/bendpoints.html In the original legislation, the computation of benefits was based on replacing a certain percentage of lifetime earnings. But it was weighted to give more return, more bang for your buck, payment for the lowest income tier. Income restribution, one of the reasons for the name Social Security. All of us are in this together and the lowest ones get some of the money paid by the higher ones.

But a person who is subject to WEP is not an example of a lower income worker. WEP applies to people who worked a significant part of their lives for a government organization and paid into a more generous pension system instead of the cheaper SSA system. So WEP exists to correct that inequity. As if law can correct all inequities. So, unfortunately, WEP now feels unfair to the person it applies to. It is called Windfall Elimination for a reason.

2. GPO (Government Pension Offset) applies to spousal benefits to people with their own government pension. Again, it has the word offset in it for a reason. To correct the inequity that would be applied if the widow/er had only been on Social Security and not exempt because of a government pension. So GPO feels unfair to those it applies to although the plan was to correct an inequity in an income redistribution system.

Conclusion, income restribution legislation will always feel unfair to someone. We haven't proven smart enough to consider all the unforseen circumstances. But how could we?