Can I collect TRS and Social Security?

Short answer, it depends.

Many teachers I talk to have this question, and the common answer they have been told by district or union employees is “No”. Knowing that they have paid money into the Social Security system, this often gets some emotional responses, as it should, but the answer they have received isn’t entirely accurate.

There are two scenarios that come into play that will allow you to receive both your TRS pension and partial Social Security benefits :

1.  Being qualified to receive your own benefits.

2.  Collecting benefits based on the working history of your spouse.

While you may be eligible to receive benefits, there some provisions that make sure you don’t “double-dip” into a government pension and the Social Security system.

 

Courtesy of 401(k)2013 / Flickr

Courtesy of 401(k)2013 / Flickr

Windfall Elimination Provision (WEP)

If you have worked other jobs besides being a teacher, you may be eligible to receive Social Security benefits, but you must be qualified to receive them. In order to be qualified, you must have earned 40 “credits”. You are able to earn four credits per year, and earn one credit for every $1,160 you earn (in 2013). Therefore, you have to have earned four credits per year over the course of ten years to be eligible for retirement benefits – there is no partial benefit if you get 20 credits, it’s all or nothing.

So let’s say you retire, receive your TRS pension but you are also eligible for Social Security benefits based on attaining over 40 credits in other employment. You will not be able to collect the full amount of your Social Security as listed on your statement. The Social Security calculator will take into consideration the amount of your TRS pension and then decrease the amount of your Social Security by a factor. You can find the calculator for this here. One thing that is important to note is that WEP cannot completely eliminate your Social Security benefit, but it can reduce it to a very small amount.

Summary: If you are eligible for Social Security benefits based on your own earnings history, you will receive some benefits.

 


Government Pension Offset (GPO)

But can I collect spousal benefits?  Can I collect any survivor benefits?

Again the answer is maybe – it will depend on the amount of your pension and the amount of the Social Security benefits. The Government Pension Offset applies to individuals who are looking to collect spousal benefits but receive a government pension. This, like WEP, will prevent them from double dipping into government funds.

The main difference between WEP and GPO is that GPO is based on someone else’s employment history. That means that the cut-off for being denied Social Security benefits is quite low – the provision states your potential survivor benefits may be reduced by two-thirds of your current pension amount. Using the GPO calculator is quite simple – you enter the amount of your pension, the amount of spousal benefits you would be entitled to, and then find out how much Social Security benefits you may receive. Because it is a 2:1 reduction, once your pension starts to go above the Social Security amount you would originally be entitled to, the new benefit starts to decline rapidly.

Traditionally, when spouses pass away, the survivor is entitled to their whole Social Security benefit if it is larger than their own. However, when they are alive, they are only entitled to receive 50% of this benefit. That’s why it is rare for teachers to receive any spousal benefit when their spouse is alive – their pension is usually larger than 50% of their spouses Social Security benefit.

 

To see how this works in practice, we’ll use an example:

Mary wants to collect her deceased husband’s benefits, so she checks to see if she is eligible. She receives a $3,500/mo teaching pension and her husband’s Social Security benefit was $1,750/mo. With these numbers, she would not be eligible to receive anything. In order for her to receive benefits, her pension would have had to been closer to $2,500 / mo. Even if this were the case, her survivor Social Security benefit would have been under $100 / mo.

(If Mary’s husband was alive, she would have only been eligible for 50% of the $1,750 ($875) so would not have received anything in that scenario either.)

Knowing this, please pass it on to other teachers who think they will never see a penny from the Social Security system. It’s time we correct this thinking.