GPO means wife gets nothing - so should I draw at 62?
I will turn 62 soon but was not planning to draw social security until probably 70 as we don’t need the income. But then I remembered my spouse will draw $0 social security when I die due to the Government Pension Offset. This made me think I might want to reconsider not drawing at 62 - in normal circumstances a spouse would get half of my benefits at my death, even if I hadn’t started drawing yet. But if I wait until 70 but die before collecting benefits she would be totally screwed. Has anyone else faced this dilemma and if so what did you decide? I am in good health and my parents have had good longevity.
"in normal circumstances a spouse would get half of my benefits at my death, even if I hadn’t started drawing yet."
I am not sure that you understand the differences in Social Security Spousal Benefits and Social Security Survivors Benefits and how the GPO affects each of them.
The amount which would be received under the Spousal Benefit or under the Survivors Benefit when the GPO is in affect depends on the ratio of the SS benefit to the pension amount - how big or how small each of them actually are in amount.
The Government Pension Offset, or GPO, affects Spousal and Survivors Social Security benefits of spouses, widows, and widowers who have a pension from a “non-covered” government job; meaning that the pension of the spouse is derived from pay that was NOT covered by Social Security so NO SS withholding taxes were paid on their salary while they were working in the government job.
In a nutshell and under NORMAL circumstances, where there is NO government pension as described above in the equation, once the primary beneficiary spouse has filed for their SS retirement benefits, the age appropriate spouse can file for their Spousal benefits based on the benefit of the primary beneficiary and if the Spousal Benefit is greater than their own benefits, they will receive Spousal benefits equal to 50% of the primary beneficiary amount, adjusted for any early filing deduction. IF APPLICABLE, the GPO would be based on this amount.
Again, In a nutshell and under NORMAL circumstances, if the primary beneficiary dies either before or after receiving SS retirement benefits, the surviving spouse, age appropriate (or caring for young children) according to the rules, can receive the benefit of the deceased spouse as a Survivors Benefit. If they are affected by the GPO, this is the benefit amount that will be reduced.
If the Spouse or the Surviving Spouse gets a government pension from a government job where they were NOT covered by the Social Security system, their Spousal or their Survivors benefit is reduced by two-thirds of the amount of their government pension. This offset is known as the GPO.
I am of the opinion, that any reduction or offset (GPO) would come out better IF applied to a larger number than a smaller one - meaning that your benefit as the primary beneficiary, on which the Spousal OR Survivors benefit is based, would be a smaller $$$ number if you take your benefit early than if you waited until FRA or 70 to get your benefit. The offset of the GPO (2/3rds of the amount of the government pension) is gonna stay relatively the same but the amount it is applied to is based on your decision as to when to file for benefits - much bigger at FRA, especially at 70 when delayed retirement credits have been added, than at 62.
I am including some links to information which you may want to review.
No, I know exactly how the GPO works, and also know for a fact my wife will get $0 as her pension is substantial and well exceeds the threshold. She will also be substantially penalized by WEP even though she had 15 years of social security earnings before going into her non SS covered job.
So my question was soliciting thoughts on if I should draw at 62 since she will never get any survivor benefits, which is a bird in the hand so to speak.
Then just double check the estimate and make the decision. Just remember, Survivor benefits, if collected at full retirement age or later, are worth 100% of the late worker's benefits, including any delayed retirement credits the worker may have accrued at time of death. So if you wait until 70, your amount will be higher before the GPO is applied.