In the third installment of the Pension Plan insight series, the video delves into the intersection of pensions and Social Security for public sector workers. It highlights the nuanced impact of government pensions on Social Security benefits, particularly for individuals not subject to Social Security payroll taxes. The video outlines challenges such as the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), both of which can limit or reduce Social Security benefits for those with pension income. The WEP targets individuals with a mix of private and public-sector work, imposing limitations on their Social Security retirement benefits. Additionally, the GPO affects spousal or survivor benefits for those with government pension income. The rationale behind these provisions is to ensure fairness in the distribution of Social Security benefits.
The video explains that years spent working in the public sector may be discounted, as if one were unemployed, impacting the calculation of Social Security benefits based on the highest-earning 35 years of work. While acknowledging that the GPO and WEP save Social Security funds, the video encourages viewers to understand how these provisions may influence their retirement plans. It underscores the importance of awareness and provides insights into Congress’s decision to reduce Social Security benefits for government pension holders, assuming their pension already provides retirement income.
Pathfinder Retirement is committed to guiding individuals through retirement intricacies with values of integrity, compassion, and service. To take your first step toward retirement, take the Pathfinder Retirement questionnaire today.