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~Why you may not get most of your Social Security benefits~

 

As you are probably aware, teachers, Ed Tech 2s & 3s, and administrators don't pay into the Social Security system in Maine (though we do pay into Medicare).  This is also the case in 14 other states.

 

If you spent your entire career in public education, this is not a big deal when it comes time to retire.  You will simply get credit for all of your years that you spent working, and all of those years will of course count toward your Maine pension (MEPERS).

 

However, probably all of us worked outside of public education at some point in our working lives, even as teenagers.  Thus we've paid into the Social Security system.  And those of us who went into teaching in Maine later in life, may have a lot of credit in the Social Security system.  (In order to be eligible for Social Security benefits in retirement, one needs 40 quarters of work in a Social Security covered job.)

 

The problem in a state like Maine is that because school districts don't pay into the Social Security system, federal law (not state law) reduces your Social Security benefits by a significant amount.  This is called the Windfall Elimination Provision, or WEP.  Apparently whoever named this bill thought that you actually getting credit for your Social Security contributions was a "windfall".....!  This doesn't mean that you won't get any Social Security benefit when you retire, but if you've ever checked your Social Security statement, the projected amount of your benefits on your statement is likely far from what you will actually receive due to the WEP.

 

Also, in the Social Security system one can choose to take a Social Security payment based on their spouse's earnings record instead of based on their own earnings record.  But another law, called the Government Pension Offset (GPO), likely eliminates any spousal benefit for many school employees.

The obvious problem with this is that one's overall retirement benefits (MEPERS plus Social Security) will not reflect the total time that they've spent working during their lives.  Thus, one's retirement income will be significantly lower than it otherwise would be.  And don't forget that MEPERS benefits do not adequately keep up with inflation once in retirement.

 

So what can you do about this?

 

First you can contact your representatives in Congress, as there is currently a bipartisan bill that has been introduced that could fix this problem.  You can use this form from the NEA to send your representatives a friendly message:  https://www.nea.org/advocating-for-change/action-center/take-action/fully-repeal-unfair-social-security-penalties

 

Secondly, you can ensure that you are saving appropriately for retirement by using a low-cost provider like Fidelity, Vanguard, or Schwab - and avoiding high-cost providers like Horace Mann and Lincoln.

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June 4, 2024