Social Security Essentials for OPERS Employees
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Transcript of Social Security Essentials for OPERS Employees
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Social Security Social Security Essentials Essentials
for for OPERS EmployeesOPERS Employees
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Earning CreditsEarning Credits
40 Credits for retirement40 Credits for retirement
Maximum 4 credits in 1 yearMaximum 4 credits in 1 year
$1,130 earnings = 1 credit in 2012 ($4,520) $1,130 earnings = 1 credit in 2012 ($4,520)
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WorkerWorkerReduced benefits as early as age 62 Reduced benefits as early as age 62 Full benefits at age 65-67Full benefits at age 65-67Increased benefits after full retirement age (FRA)Increased benefits after full retirement age (FRA)
Wife or HusbandWife or HusbandAs early as age 62As early as age 62At any age if caring for child under age 16 or disabledAt any age if caring for child under age 16 or disabledDivorced spouses may qualify if married at least 10 yearsDivorced spouses may qualify if married at least 10 years
ChildChildUnmarried and up to age 18 or 19 if still in high schoolUnmarried and up to age 18 or 19 if still in high schoolAny age if disabled before age 22Any age if disabled before age 22
Retirement BenefitsRetirement Benefits
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Benefits for Dependent SpousesBenefits for Dependent Spouses
Spouse may receive up to 50% of a worker’s Spouse may receive up to 50% of a worker’s fullfull Social Security benefitSocial Security benefit
A spouse benefit is reduced by amount equal A spouse benefit is reduced by amount equal toto fullfull retirement benefit the spouse has retirement benefit the spouse has earned on his/her own work recordearned on his/her own work record
Reduced if started early (before FRA) Reduced if started early (before FRA)
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Survivor BenefitsSurvivor Benefits
Widow(er)Widow(er)Reduced benefits as early as age 60 or, if disabled, Reduced benefits as early as age 60 or, if disabled, age 50 age 50 At any age if caring for child of worker under age 16 At any age if caring for child of worker under age 16 or disabled before age 22or disabled before age 22Divorced widow(er) may qualify if married at least Divorced widow(er) may qualify if married at least 10 years 10 years Remarriage @ age 60 or later does not end benefitRemarriage @ age 60 or later does not end benefitBenefit at full retirement age is Benefit at full retirement age is usuallyusually the same as the same as what worker was receiving at his death or would what worker was receiving at his death or would have received at full retirement age have received at full retirement age
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OPERS and Social SecurityOPERS and Social Security
When your pension is from work not covered When your pension is from work not covered by Social Security, two laws may affect your by Social Security, two laws may affect your Social Security benefit:Social Security benefit:
Government Pension Offset (GPO)Government Pension Offset (GPO)
Windfall Elimination Provision (WEP)Windfall Elimination Provision (WEP)
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OPERS and Social SecurityOPERS and Social Security
Government Pension Offset (GPO)Government Pension Offset (GPO)
Only applies to Social Security Only applies to Social Security spouse/widow(er) benefitsspouse/widow(er) benefits
Reduces your Social Security Reduces your Social Security spouse/widow(er) benefit by 2/3 of your spouse/widow(er) benefit by 2/3 of your OPERS pensionOPERS pension
Does Does notnot apply to OPERS survivor pensionsapply to OPERS survivor pensions
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Spouse Benefit ComputationSpouse Benefit Computation
Fred and Alice both paid FICA. Fred receives Fred and Alice both paid FICA. Fred receives $2,513/month Social Security benefit at Full $2,513/month Social Security benefit at Full Retirement AgeRetirement Age
Alice receives $1,400 Alice receives $1,400 Social Security benefitSocial Security benefit at at Full Retirement AgeFull Retirement Age
Spouse 50% rate = $1,256Spouse 50% rate = $1,256
Alice cannot get spouse benefits because her own Alice cannot get spouse benefits because her own Social Security benefit is greaterSocial Security benefit is greater
Alice’s own benefit offsets spouse benefit!Alice’s own benefit offsets spouse benefit!
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GPO Example: Spouse GPO Example: Spouse
Tom’s Social Security benefit at Full Retirement Tom’s Social Security benefit at Full Retirement Age is $2,513/monthAge is $2,513/month
Ann’s spouse benefit from Tom at her Full Ann’s spouse benefit from Tom at her Full Retirement Age Retirement Age = $1,256= $1,256
2/3 of Ann’s $2,100 OPERS = $1,4002/3 of Ann’s $2,100 OPERS = $1,400
Ann’s Social Security spouse benefit = $ 0Ann’s Social Security spouse benefit = $ 0
Ann’s OPERS benefit offsets the spouse benefit -Ann’s OPERS benefit offsets the spouse benefit -just as any Social Security benefit she earned would just as any Social Security benefit she earned would
had she worked under an SSA covered job!had she worked under an SSA covered job!
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GPO Example: Widow(er)GPO Example: Widow(er)
Tom diesTom diesAnn’s widow benefit Ann’s widow benefit = $2,513 = $2,5132/3 of Ann’s $2,100 OPERS 2/3 of Ann’s $2,100 OPERS = $1,400 = $1,400Ann’s Social Security widow benefit = $1,113Ann’s Social Security widow benefit = $1,113
If OPERS pension is $4,975 or more, 2/3 isIf OPERS pension is $4,975 or more, 2/3 is
greater than highest spouse/widow benefitgreater than highest spouse/widow benefit
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OPERS and Social SecurityOPERS and Social Security
If you have 40 credits, you If you have 40 credits, you willwill receive a receive a monthly Social Security benefitmonthly Social Security benefit
Social Security benefit Social Security benefit will likelywill likely be be computed using a modified formula due to computed using a modified formula due to OPERS pensionOPERS pension
WindfallWindfall Elimination Provision (WEP)
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Calculating BenefitsCalculating Benefits
LifetimeLifetime Social Security earnings adjusted for Social Security earnings adjusted for wage inflation wage inflation
Add together highest 35 years Add together highest 35 years
Divide total by 420 months (35 years x 12) to Divide total by 420 months (35 years x 12) to calculate monthly average calculate monthly average
Benefit reflects a percentage of lifetime average Benefit reflects a percentage of lifetime average monthly earnings figure monthly earnings figure
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Higher average lifetime Social Security Higher average lifetime Social Security earnings produce a higher benefit earnings produce a higher benefit butbut
Lower-paid workers receive larger Lower-paid workers receive larger benefits in relation to their earnings than benefits in relation to their earnings than higher-paid workershigher-paid workers
Calculating BenefitsCalculating Benefits
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Replacement Rates Replacement Rates (Approximate)(Approximate)
Low Income Worker Low Income Worker $20,800 annual avg. $20,800 annual avg. ($10.00/hr)($10.00/hr)
$989/month benefit at full age$989/month benefit at full age
Middle Income WorkerMiddle Income Worker$41,600 annual avg. $41,600 annual avg. ($20.00/hr)($20.00/hr)
$1,543/month benefit at full age$1,543/month benefit at full age
Higher Income WorkerHigher Income Worker $84,032 annual avg.$84,032 annual avg. ($40.00/hr)($40.00/hr)
$2,241/month benefit at full age$2,241/month benefit at full age
% o
f ear
ning
s%
of e
arni
ngs
57%
44.5%
32%
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Why Windfall Provision?Why Windfall Provision?
Years with 0 earnings under Social Security Years with 0 earnings under Social Security reduce average lifetime earnings figurereduce average lifetime earnings figure
The result: Your average FICA earnings are The result: Your average FICA earnings are low and you look like a low-income worker low and you look like a low-income worker even if your PERS earnings are high(er)even if your PERS earnings are high(er)
Windfall reduces the higher replacement % Windfall reduces the higher replacement % intended for low income workersintended for low income workersWindfall stops if a worker dies so survivor Windfall stops if a worker dies so survivor benefits are not reducedbenefits are not reduced
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Windfall RulesWindfall Rules
Recognizes the more years a worker has Recognizes the more years a worker has paid Social Security taxes on substantial paid Social Security taxes on substantial earnings, the closer that person should be to earnings, the closer that person should be to the standard benefit formula.the standard benefit formula.
30+ years 30+ years = WEP doesn = WEP doesn’’t applyt apply21-29 years21-29 years = modified WEP = modified WEP 20 or fewer years 20 or fewer years = full WEP = full WEP
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WEP & Your Benefit EstimateWEP & Your Benefit Estimate
Benefit estimates found using the “Estimate Benefit estimates found using the “Estimate your Benefit” option found on Social Security’s your Benefit” option found on Social Security’s internet home page do not figure windfall internet home page do not figure windfall
Online WEP & GPO Calculators & webinar Online WEP & GPO Calculators & webinar for government workers are at:for government workers are at:
www.socialsecurity.gov/gpo-wepwww.socialsecurity.gov/gpo-wep www.socialsecurity.gov/webinars
Windfall stops if a worker dies so survivor Windfall stops if a worker dies so survivor benefits are not reduced.benefits are not reduced.
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MedicareMedicare
Automatic if you are getting Social Security Automatic if you are getting Social Security benefits at 65benefits at 65
Contact SSA at age 65 if you are not getting Contact SSA at age 65 if you are not getting benefitsbenefits
May apply on own Social Security record May apply on own Social Security record (many OPERS employees pay Medicare tax) (many OPERS employees pay Medicare tax) or the record of a spouse -living, deceased, or the record of a spouse -living, deceased, disabled, or divorceddisabled, or divorced
May file even if deferring cash paymentsMay file even if deferring cash payments
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How to FileHow to FileVia the Internet at Via the Internet at www.socialsecurity.govwww.socialsecurity.gov
In the office or over the telephoneIn the office or over the telephone
For an appointment, call 1-800-772-1213For an appointment, call 1-800-772-1213
When to Contact Social SecurityWhen to Contact Social SecurityUp to 3 months before you retire or attain age 62Up to 3 months before you retire or attain age 62
If over age 62, review your work plans before If over age 62, review your work plans before Feb. 1 to determine when benefits could startFeb. 1 to determine when benefits could start
Filing for BenefitsFiling for Benefits
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Online Services for BeneficiariesOnline Services for Beneficiaries
Change Address and Telephone* Change Address and Telephone*
Request Replacement Medicare CardRequest Replacement Medicare Card
Request Benefit Verification LetterRequest Benefit Verification Letter
Request new 1099 for taxesRequest new 1099 for taxes
Request Direct Deposit*Request Direct Deposit*
*Request Password*Request Password
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Thank You !Thank You !