Can CT Teachers Collect Social Security?
Everyone collects Social Security… right? Not exactly, and throughout this blog I will describe the relationship between CT Teachers and Social Security. First, I will discuss the obvious such as whether they can collect Social Security, and if so, how. I will end the blog with a discussion of two forms of provisions passed by congress that were created to discourage teachers and other State employees from collecting both potential forms of retirement income.
Key Takeaways:
· Social Security Overview
· Connecticut Teachers and Social Security
· How to Still Get Social Security
· What is the Windfall Elimination Provision?
· The Government Pension Offset Explained
Social Security Overview
Social Security is a program that was created to help mitigate the effects of losing your income to retirement. You pay into Social Security through a FICA tax which is automatically deducted from each of your paychecks. When you start collecting, the amount that you receive will be dependent on how much you have contributed through FICA taxes throughout your career. The benefit itself can be collected between ages 62 and 70, with full retirement age ranging from 66 to 67 based on the year you were born. At full retirement age you will receive your normal benefit, compared to a reduced benefit for collecting before it and an increased benefit for collecting after.
Connecticut Teachers and Social Security
Simply put, public school teachers in Connecticut cannot contribute towards Social Security. The Social Security Act in 1935 excluded federal, state, and local public employees. Later in 1950, Congress passed a law that allowed State and local government to contribute, but the Connecticut Education Association voted against it. There are fourteen States including Connecticut that exclude teachers from contributing to Social Security. Instead, these States provide independent retirement systems for those teachers in the form of a pension. For example, the Connecticut Teachers Retirement Board issues the pension for CT teachers.
There have been discussions about including the teachers in Social Security, however, it would be a complex process. Teachers currently contribute 8.7% of their salary towards their pension. While Social Security taxes are 6.2% which means that if teachers were allowed both, then they would have to contribute around 15% per month. Once the remaining taxes were taken, these teachers would not have a lot of money left to cover their expenses. For these reasons, I would not expect teachers to be allowed to contribute to Social Security anytime soon.
How to Still Get Social Security
There is a way for Connecticut teachers to collect Social Security despite not being able to contribute. If the individual has 10 years of work experience where they paid into Social Security through FICA taxes, then they can still collect a Social Security benefit. This can be done through work prior to becoming a CT teacher or after. It’s not uncommon for a retired Connecticut teacher to go back to work long enough to qualify for a Social Security benefit as well. Now two forms of retirement income may sound great, but unfortunately a few provisions have been passed to reduce these individuals’ total benefit.
What is the Windfall Elimination Provision?
First is the Windfall Elimination Provision (WEP) which reduces the Social Security benefit of an individual that is collecting a pension from a job they did not pay Social Security taxes at. Therefore, this provision does not affect your pension, but instead your Social Security benefit. The WEP was approved in 1983 with a bunch of other Social Security reforms. There have been conversations about it being removed in the future, but that has not been accomplished yet.
Unfortunately, the WEP can reduce your Social Security benefit by up to half so it can have a large impact on your total benefit. However, the good thing about the Windfall Elimination Provision is that the calculation is publicly available so you can see how your Social Security benefit will be affected. Even better, there is a free online calculator provided by SSA.gov that allows you to calculate this, all you have to is fill in the inputs. These values can then be used in your financial and retirement planning!
The Government Pension Offset Explained
The Government Pension Offset (GPO) reduces the Social Security benefit of an individual that is collecting a government pension and a social Security benefit from a passed spouse. If the surviving spouse did not pay into Social Security while working their government position, then their benefit will be reduced by 2/3’s the amount of their government pension. There are exemptions, however, they are only allowed to those who meet specified criteria. Like WEP, GPO is another provision that people are fighting to eliminate.
To learn more about the GPO, you can visit the SSA.gov website (link above). On this page, you will find a calculator that you can use to calculate benefit net the reduction. There are only two inputs, the estimated gross monthly value of the government pension and the estimated monthly amount of the Social Security survivor benefit. There is also an explanation of the calculation itself if you would prefer to do it yourself. You will also find the criteria to get an exemption and contact information if you have specific questions about your benefits.
If you are planning to retire soon and would like assistance with calculating these numbers or creating retirement projections, then I could be of service. As a financial planner, I help clients with retirement planning, investment management, tax planning, and more. If you are interested, you can book your free consultation on my calendar where we can discuss whether my expertise matches your needs.
If you are interested in reading related blogs, then I would recommend:
“2 Upcoming Changes for CT State Employees Pensions in 2022”
“Connecticut Teaches retirement Board Cost of Living Adjustment in 2023”