Question 991: I am a Missouri teacher and I don't pay into Social Security although I did several years ago. My husband says he doesn't think I will get any of his Tier 1 Railroad Retirement benefit. He also says I shouldn't take any of my Social Security. Can you clear this up for me?
Answer: I will try to explain the two provisions of the Social Security Act that affect the Social Security and Railroad Retirement benefits that you are entitled to. Both provisions were enacted in the 1980's and were designed to put the millions of people who receive public pensions from the Federal and State governments, including school teachers, in the same position as workers under Social Security or Railroad Retirement.
The important thing to remember is that, if a person is entitled to two different benefits under Social Security, only the higher one is paid.
Many public employees are not covered by Social Security but receive substantial public pensions from Federal and State governments. If their employment had been under Social Security, their own Social Security benefit would have been higher than any spouse or widow(er)'s benefit so they would have received only their own benefit. The "Public Pension Offset" provision is designed to reduce a spouse or widow(er)'s Social Security by 2/3 of the Federal or State pension. The offset also applies to Tier 1 of a Railroad Retirement Spouse or Widow(er)'s Annuity.
Because most of your work was as a school teacher in Missouri and was not covered by Social Security, your Social Security benefit is computed under an alternate formula which produces a lower benefit. The regular Social Security formula is disproportionately weighted on the lowest part of the earnings used to compute your benefit. In effect, the formula gives a bonus or "windfall" to workers with lower lifetime earnings. The alternate formula is used when workers do not have at least 35 years of substantial earnings covered by Social Security and is referred to as the "Windfall Elimination."
Taking your own Social Security benefit before your husband retires will increase your monthly retirement income and will not adversely affect your Spouse Annuity. You also will be eligible for a Widow's Annuity in the event of your husband's death. Again, Tier 1 will be reduced by 2/3 of your teacher's pension and by the amount of your own Social Security. But you will receive a full Tier 2 which is not affected by either benefit.