By Russell Gloor, National Social Security Advisor at the AMAC Foundation, the non-profit arm of the Association of Mature American Citizens
Dear Rusty: I retired with a (gross) $4600 per month Civil Service Retirement System (CSRS) annuity from the US Postal Service in December 2022. I am 66 and will attain full retirement age in November of this year. I know at that point I will not be subject to the “earnings” test, but I will be affected by the dreaded “government offset.” I HAVE earned enough quarters and will be eligible for a small social security benefit. First question: will my Social Security benefit just be reduced, or will it be eliminated? Second: will it make a difference if I apply in November or when I turn 70? I am currently working part-time and paying Social Security FICA taxes. Third: if my SS is being eliminated, do I even have to apply? Fourth and last: I am married, filing jointly and my wife is currently receiving SS benefits (only). Could I also be affected by the “windfall” provision if my wife predeceased me?
Thank you in advance for your service as a Social Security Advisor.
Signed: Upset to Offset and Downfall to Windfall
Dear Upset: You are correct that when you reach your full retirement age (FRA) in November you will no longer be subject to Social Security’s “earnings test,” which limits how much you can earn while collecting early benefits. But if you apply for your Social Security to start in November, your SS benefits will be affected by the Windfall Elimination Provision (WEP) due to your non-covered CSRS pension (because you didn’t pay into SS while earning your CSRS pension). As you may know, only those federal employees who retired under CSRS (Civil Service Retirement System) are affected by WEP; newer Federal employees who retire under the more recent FERS (Federal Employee Retirement Program) program are not affected.
Because of your CSRS pension, your Social Security benefit will be reduced, but not eliminated. The amount of reduction will be based on the number of years of non-government employment you had (where you paid into Social Security). Usually, those who have spent a lifetime earning a pension without contributing to SS, but who have a separately earned SS pension, will see their SS benefit cut approximately in half.
To answer your second question, your benefit will, indeed, continue to grow if you wait until you are age 70 to claim Social Security. Benefits taken after one’s full retirement age earn “delayed retirement credits” (DRCs), which add to your final benefit amount. Your benefit will still be reduced by WEP, but your final amount will be more because you waited longer to claim.
Re your third question, your SS benefit will only be reduced (not eliminated), so it’s always worthwhile to apply. Otherwise, you are forfeiting Social Security money you are entitled to.
And lastly, if your wife dies before you, your CSRS pension will also cause another provision called the Government Pension Offset (GPO) provision to apply. The GPO will reduce your surviving spouse benefits by 2/3rds of the amount of your government CSRS pension, which will likely eliminate any spousal benefit you are entitled to (except the so-called “death benefit” – which is a one-time lump sum $255 benefit paid to a surviving spouse).
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.
