In April 2014, more than 40 million individuals 65 and older were receiving Social Security benefits. About 5 million widows and widowers receive monthly Social Security benefits based on their deceased spouse’s earnings record; for many of those survivors, particularly aged women, those benefits are keeping them out of poverty.
Spousal, widow or widower benefits may be reduced, however, if people receive a pension from a federal, state or local government based on work where they did not pay Social Security taxes.
In 15 states, including Maine, some public-sector employees are not covered by Social Security.
Two rules apply:
1. The Government Pension Offset provision applies to spousal and survivor benefits and can completely wipe out Social Security payments. If you receive a pension from a government job in which you did not pay Social Security taxes, some or all of your Social Security spouse’s, widow’s or widower’s benefit may be offset due to receipt of that pension.
— In enacting the GPO, Congress intended to ensure that government employees who do not pay Social Security taxes would be treated in a similar manner to those who do pay Social Security taxes.
— If an individual is subject to GPO rules, Social Security benefits will be reduced by two-thirds of the government pension.
— More than half a million Social Security beneficiaries have had their benefits reduced by the GPO formula, according to the Congressional Research Service.
Windfall Elimination Tax: If you work for a federal, state or local government agency, a nonprofit organization or in another country, you may be eligible for a pension based on earnings not covered by Social Security.
— A pension based on earnings not covered by Social Security can affect the amount of your Social Security benefit.
Source: U.S. Social Security Administration