This is the latest in a series of biweekly articles featuring Social Security claiming case studies drawn from the ALM publication "2024 Social Security & Medicare Facts," by Michael Thomas with support from Jim Blair, a former Social Security administrator, and Marc Kiner, a planning expert with extensive experience in public accounting.
The Scenario: High-Earning Couple With a Pension
Larry and Judy are a married couple. Larry is a high earner who spent his career in the private sector, with all of his wages covered by Social Security. Judy worked most of her career in employment that was not covered by Social Security and is eligible for a pension from that work.
Judy also has some work covered by Social Security and has earned her 40 credits, but her own benefit for covered work will be reduced due to the windfall elimination provision (WEP).
Before the WEP offset, Judy's Social Security benefit would be $571 per month at her full retirement age of 67 in February 2029, given her birth year is 1962. The WEP reduces this benefit to $254.
Judy's non-covered pension also affects her spousal and potential survivor benefit. These benefits are reduced due to the government pension offset (GPO) by two-thirds of the amount of her non-covered pension.
Judy's non-covered pension is $1,476, and therefore her spousal and potential survivor benefits are reduced to $984. As a result, Judy is not eligible for a spousal benefit at age 62 or age 70.
Having been born in late 1957, Larry's FRA is 66.5, when his full worker benefit is $2,589.
Judy has an actuarially projected death age of 87, while Larry is expected to live to 84.
