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Social Security & Medicare Questions Q: I worked for 22 years and paid Social Security taxes. Then I got a job with the University of Illinois and did not have to pay Social Security tax. When I retire soon, I will get only a small pension, about $2,500 per month after 24 years of service. As I understand it, I could get as little as $200 per month in Social Security benefits instead of the approximately $700 I could otherwise expect because of the Social Security "Windfall" rules. Now $2,500 hardly seems like a windfall to me, certainly not enough to justify such a large reduction in Social Security benefits. A: Many retired federal workers, state employees, and school teachers often learn that the Social Security "Windfall" and "Offset" modifications are no fun. The Social Security benefits of people who spend their careers working in non-Social Security covered jobs can be reduced because of their federal, state or local government pensions. Having 40 quarters (10 years) of Social Security coverage qualifies you for benefits, but not necessarily full benefits. Windfall applies to a Social Security benefit earned by a government retiree. Offset applies to a Social Security benefit the government retiree's spouse is entitled to. Under the "windfall law" that you mention, Social Security benefits of retired public employees can be reduced by as much as $265.5 per month if you apply for benefits at age 62. The reduction should be less for you having spent more than 10 years under Social Security-covered employment. Under the "offset law" your spouse can be hit even harder when she tries to collect a spousal or survivor benefit based on your Social Security coverage. The offset law can wipe out that benefit completely. Bills to modify the windfall and offset laws are picking up support. Legislation introduced by Representative Barney Frank (D-MA) would reduce the impact of the windfall formula on Social Security benefits. It would exempt the first $2,000 in combined monthly civil service/Social Security benefits from the formula, apply a partial reduction to amounts from $2,000 to $3,000, and apply the full formula to amounts more than $3,000 a month. Legislation sponsored by Representative William J. Jefferson (D-LA) would modify the offset formula. His bill would exempt the first $1,200 a month in combined public pension/Social Security benefits from the offset. A record number of House and Senate members pledged to support modifications in the windfall and offset laws. For more information about your Social Security benefits call Social Security toll free at 1-800-772-1213. This article first appeared in Volume 5, Issue 9 of "The Social Security and Medicare Advisor" newsletter (September/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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