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~What the Elimination of WEP & GPO May Mean for You~

 

Congress's repeal of the WEP is great news for those of us who have enough Social Security credits to earn a Social Security benefit in retirement.  You need 40 quarters of Social Security credits to earn a benefit in retirement.  If you qualify, one can choose to start collecting Social Security at age 62 (though you may not want to collect then if you're still working - see https://www.usatoday.com/money/blueprint/retirement/earn-and-collect-social-security/.  The elimination of the WEP penalty means that our Social Security benefit will no longer be reduced by, potentially, 40% or more.  The fact that Congress finally repealed this law that was over 40 years old is amazing.

 

 

That's the obvious, but there are other impacts of this repeal that may be less so.  

 

First, because of the way future Social Security benefits are accumulated, just working part-time each year can dramatically increase your future Social Security payment.  This is because the first portion of earnings counts the most in terms of your future Social Security benefits.  In 2024, 90% of your first $1226 of averaged inexed monthly earnings are credited toward your future Social Security benefits.  On the other hand, only 32% of you next $6000 of averaged indexed montnly earnings are credited toward future benefits.  This was actually one of the reasons against repealing the WEP.  But now that the WEP has been repealed, this has unlocked a potentially significant increase in retirement income for teachers who can work part-time.  See:  https://www.bankrate.com/retirement/how-social-security-benefits-are-calculated/

 

However, Congress not only repealed the WEP, but they also repealed the GPO.  

 

That law penalized teachers, administrators, and Ed Tech 2s & 3s in Maine if they wanted to collect a Social Security benefit based on someone else's earnings record.  That may be a foreign concept to some of us, but the Social Security law allows you to collect a Social Security benefit based on your own earnings record or on a spouse's earnings record.  One can potentially collect a benefit equal to up to half of a spouse's Social Security benefit if one starts collecting this benefit at one's "full retirement age" (likely 67 for most of us).  So, if one's own Social Security benefit was, say, $0 because one had no Social Security covered earnings, but their spouse's benefit is collecting a benefit of $2000/month, one could potentially collect a spousal benefit based on their spouse's earnings equal to $1000/month if they waited to collect at 67.  Previously the GPO would have likely wiped that entire amount away.  You can use this calculator to determine a potential benefit:  https://www.ssa.gov/oact/quickcalc/spouse.html

 

Further, if you are divorced, with the repeal of the GPO you may also now be able to collect a Social Security benefit based on your ex-spouse's earnings record, even if they aren't collecting yet, as long as you were married for at least ten years and you are not remarried.  And if/when you do decide to collect a Social Security benefit based on your ex-spouse's earnings record, they will never know you are doing so as the Social Security Administration does not notify ex-spouses of Social Security claims by others based on the ex-spouse's earnings record.  See https://blog.ssa.gov/ex-spouse-benefits-and-how-they-affect-you/ for more information.

 

Similarly, if your spouse (or ex-spouse) has passed away, you now may also be able to collect a survivor's Social Security benefit of up to 100% of the decedent's benefit, free from the GPO penalty.  This benefit can be claimed as early as age 60 (though it will be a reduced benefit when collecting early and is also subject to the earnings limit).  See https://www.ssa.gov/survivor/eligibility

These are a few just a few of the benefits of the repeal of the WEP and GPO.  Social Security benefits are very complex, so if you have questions about what Social Security benefits you may be eligible for, contact the Social Security office in Portland (877-319-3076).  I have found them to be very helpful in answering my own questions.  If you have questions about when the best time is to start collecting a benefit, contact your financial advisor for help in determining the best strategy for you based on your personal circumstances.