The Government Pension Offset (GPO) Sucks
Last week, I wrote about the Windfall Elimination Provision (WEP), and how it’s unlikely to be repealed anytime soon. That was a bummer for a lot of people, but today I’m going to tell you about another government program that’s even worse: the GPO.
The GPO is a provision of Social Security law that reduces or eliminates the spousal benefit for people who receive an annuity from a job where they didn’t pay Social Security taxes. That means if you worked for the government for a long time and have a nice pension, you might not be able to collect any Social Security benefits on your spouse’s record.
How much the GPO reduces your benefit depends on the size of your government pension. For every $3 you receive in your pension, the GPO reduces your Social Security benefit by $2. So if you have a $1,200 monthly pension, the GPO will reduce your Social Security benefit by $800. That means you’ll only get $400 a month from Social Security, even if you’re married to someone who has a high-paying job.
The GPO is a controversial program, and there are a lot of people who think it’s unfair. They argue that it penalizes people who worked for the government for many years and paid into the government pension system. They also argue that it forces couples to make difficult choices about how to save for retirement.
The government has defended the GPO, arguing that it’s necessary to keep Social Security solvent. They say that the GPO helps to ensure that everyone pays their fair share into the system.
Whether you agree with the GPO or not, it’s important to understand how it works. If you’re thinking about retiring, you need to factor in the impact of the GPO on your retirement income. You may want to consider working longer or saving more money to make up for the lost Social Security benefits.
Here are some tips for dealing with the GPO:
- Plan ahead. The GPO can have a big impact on your retirement income, so it’s important to plan ahead. Start by estimating your Social Security benefits and your government pension. Then, use a retirement calculator to see how the GPO will affect your retirement income.
- Consider working longer. If you’re close to retirement, you may want to consider working longer to increase your Social Security benefits. You can also consider working part-time in retirement to supplement your income.
- Save more money. The GPO can reduce your Social Security benefits, so it’s important to save more money for retirement. You can save for retirement in a variety of ways, including through a 401(k), IRA, or other retirement savings account.
How the GPO Works
The GPO reduces the spousal or widow(er) benefit by two-thirds of the monthly non-covered pension. For example, if you receive a monthly non-covered pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits.
The GPO can partially, or fully, offset an individual’s spousal/widow(er) benefit, depending on the amount of the non-covered pension. The chart below shows how the GPO would affect spousal benefits for two non-covered pension amounts.
|Non-Covered Pension Amount||Spousal Benefit Reduction|
|$301-$600||Two-thirds of the non-covered pension|
|$600||Full spousal benefit reduction|
Who is Affected by the GPO?
The GPO applies to spouses who qualify for both:
- Social Security spousal benefits based on their spouses’ work histories in Social Security–covered employment
- Their own retirement or disability government pensions, based on their own work in government employment that was not covered by Social Security
The GPO does not apply to the following:
- Spouses who are fully insured for Social Security benefits on their own work record
- Spouses who are widows or widowers who have not remarried
- Spouses who are disabled
How to Avoid the GPO
There are a few ways to avoid the GPO:
- Work for a job that is covered by Social Security.
- Pay Social Security taxes on your earnings from a non-covered job.
- Get your spouse to waive their right to Social Security spousal benefits.
Contact the Social Security Administration
If you have any questions about the GPO, you can contact the Social Security Administration at 1-800-772-1213.
What is the Government Pension Offset?
The Government Pension Offset (GPO) is a provision of the Social Security Act that reduces Social Security spousal or widow(er)’s benefits for people who receive a pension from a government job where they did not pay Social Security taxes.
Who is affected by the GPO?
The GPO applies to spouses who are eligible for both:
1. Social Security spousal benefits based on their spouses’ work histories in Social Security–covered employment; and
2. Their own retirement or disability government pensions, based on their own work in government employment that was not covered by Social Security.
How much does the GPO reduce my benefits?
The GPO reduces your Social Security benefits by two-thirds of your government pension. For example, if you get a monthly civil service pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits.
Can I avoid the GPO?
There are a few ways to avoid the GPO:
1. You can work in a job that is covered by Social Security for at least 6 credits (40 quarters) after the age of 50.
2. Your spouse can work in a job that is covered by Social Security for at least 6 credits (40 quarters) after the age of 50.
3. You can file for divorce.
How can I find out if I am affected by the GPO?
You can check your Social Security statement to see if you have any government pensions that are not covered by Social Security. You can also contact the Social Security Administration to see if you are affected by the GPO.
What are the arguments for and against the GPO?
Proponents of the GPO argue that it is fair because it prevents people from collecting both a government pension and a Social Security spousal benefit without having paid into Social Security. Opponents of the GPO argue that it is unfair because it can reduce benefits for people who have paid into Social Security for many years.
The GPO is a complex provision of the Social Security Act that can have a significant impact on your retirement income. If you are considering retiring, it is important to understand how the GPO may affect you.