Social Security Social Security Essentials Essentials

for for OPERS EmployeesOPERS Employees

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)

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

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)

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

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)

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

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!

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!

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

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)

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

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

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

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arni

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57%

44.5%

32%

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

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

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.

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

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

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 !