If you're a teacher, the amount of Social Security retirement benefits to which you are entitled will be reduced if you were not subject to Social Security withholding during part or all of your time or employment. When Social Security was first enacted in 1935, most government employees at all levels -- federal, state and local -- were exempt. They didn't have to pay Social Security taxes, and they weren't eligible for Social Security benefits. That has since changed, and most teachers and other government employees do pay into Social Security and are eligible for full benefits, though those benefits may be reduced if the retiree was not subject to Social Security withholding for part of his career.
Eligible for Full Benefits
Simply put, you are eligible for full benefits under Social Security if you were paying into the Social Security system during your entire time of employment. If you paid into Social Security the entire time you were employed as a teacher, you will receive Social Security benefits exactly like everyone else does.
You may be eligible for full benefits even if you weren't covered by Social Security when your teaching career started under one of two conditions:
- The government entity (school system) for which you worked entered into an agreement with the Social Security Administration, and the SSA began withholding Social Security taxes from your pay when it was first eligible to do so at the beginning of 1984.
- You have at least 30 years of substantial earnings that was subject to Social Security withholding (this does not all have to come from your teaching career).
When Your Social Security Benefits Are Reduced
If you did not have Social Security withholding for any part of your employment that was covered by a state or local government pension -- or both -- and you are not eligible for full benefits under other provisions, the amount of Social Security benefits to which you are entitled will be reduced. This affects both Social Security retirement benefits based on your own work record and Social Security spousal or widow/widower benefits to which you may be entitled based on your spouse's Social Security entitlements.
The amount of Social Security retirement benefits to which you are entitled is affected in two ways. First, the income you received when you were not subject to Social Security withholding will not be represented in your Social Security record -- and the amount of benefits to which you're entitled is based on how much you paid in. Secondly, the government pension you receive based on income that was not subject to Social Security taxes will reduce your Social Security benefits under the Windfall Elimination Provision based on:
- The year you turn 62 and become eligible for Social Security benefits, and
- The number of years of substantial income you had that was subject to Social Security withholding
The government enacted the Windfall Elimination Provision <ahref="http: www.ssa.gov="" pubs="" en-05-10045.pdf"=""> </ahref="http:>to close a loophole that allowed some government employees to double dip from both their government pension (from income on which they had not paid Social Security taxes) and Social Security. Before 1983, those not covered by Social Security calculated their benefits as if they had been low-wage workers for the duration of their careers -- clearly, not the case with most government employees. The Windfall Elimination Provision closed the loophole so that government employees' benefits better reflected the Social Security taxes they had paid over their careers.
The Social Security Administration maintains a webpage with a chart that shows how much your Social Security benefits will be reduced. Your benefits may not be reduced by an amount more than half of your pension benefit.
The amount of spousal or widow/widower benefits based on your spouse's Social Security record will also be reduced if you were not subject to Social Security withholding. The reduction in spousal/widow's benefits is equal to two-thirds of your spousal/widow's benefit.
If you are unsure whether the school district(s) for which you worked had an agreement with the SSA (and thus, whether you had Social Security withholding), contact your State Social Security Administrator. The National Conference of State Social Security Administrators maintains a website where you can look up the contact information of the administrator for your state.