Social Security Essentials for OPERS Employees

Earning Credits 40 Credits for retirement 40 Credits for retirement Maximum 4 credits in 1 year Maximum 4 credits in 1 year $1,130 earnings = 1 credit in 2012 ($4,520) $1,130 earnings = 1 credit in 2012 ($4,520)

Worker Reduced benefits as early as age 62 Full benefits at age Increased benefits after full retirement age (FRA) Wife or Husband As early as age 62 At any age if caring for child under age 16 or disabled Divorced spouses may qualify if married at least 10 years Child Unmarried and up to age 18 or 19 if still in high school Any age if disabled before age 22 Any age if disabled before age 22 Retirement Benefits

Benefits for Dependent Spouses Spouse may receive up to 50% of a worker’s full Social Security benefit A spouse benefit is reduced by amount equal to full retirement benefit the spouse has earned on his/her own work record Reduced if started early (before FRA)

Survivor Benefits Widow(er) Reduced benefits as early as age 60 or, if disabled, age 50 At any age if caring for child of worker under age 16 or disabled before age 22 Divorced widow(er) may qualify if married at least 10 years age 60 or later does not end benefit Benefit at full retirement age is usually the same as what worker was receiving at his death or would have received at full retirement age

OPERS and Social Security When your pension is from work not covered by Social Security, two laws may affect your Social Security benefit: Government Pension Offset (GPO) Windfall Elimination Provision (WEP)

OPERS and Social Security Government Pension Offset (GPO) Only applies to Social Security spouse/widow(er) benefits Reduces your Social Security spouse/widow(er) benefit by 2/3 of your OPERS pension Does not apply to OPERS survivor pensions

Spouse Benefit Computation Fred and Alice both paid FICA. Fred receives $2,513/month Social Security benefit at Full Retirement Age Alice receives $1,400 Social Security benefit at Full Retirement Age Spouse 50% rate = $1,256 Alice cannot get spouse benefits because her own Social Security benefit is greater Alice’s own benefit offsets spouse benefit! Alice’s own benefit offsets spouse benefit!

GPO Example: Spouse Tom’s Social Security benefit at Full Retirement Age is $2,513/month Ann’s spouse benefit from Tom at her Full Retirement Age = $1,256 2/3 of Ann’s $2,100 OPERS = $1,400 Ann’s Social Security spouse benefit = $ 0 Ann’s OPERS benefit offsets the spouse benefit - just as any Social Security benefit she earned would had she worked under an SSA covered job!

GPO Example: Widow(er) Tom dies Ann’s widow benefit = $2,513 2/3 of Ann’s $2,100 OPERS = $1,400 Ann’s Social Security widow benefit = $1,113 If OPERS pension is $4,975 or more, 2/3 is If OPERS pension is $4,975 or more, 2/3 is greater than highest spouse/widow benefit greater than highest spouse/widow benefit

OPERS and Social Security If you have 40 credits, you will receive a monthly Social Security benefit Social Security benefit will likely be computed using a modified formula due to OPERS pension Windfall Windfall Elimination Provision (WEP)

Calculating Benefits Lifetime Social Security earnings adjusted for wage inflation Add together highest 35 years Divide total by 420 months (35 years x 12) to calculate monthly average Benefit reflects a percentage of lifetime average monthly earnings figure

Higher average lifetime Social Security earnings produce a higher benefit but Lower-paid workers receive larger benefits in relation to their earnings than higher-paid workers Calculating Benefits

Replacement Rates (Approximate) Replacement Rates (Approximate) Low Income Worker $20,800 annual avg. ($10.00/hr) $989/month benefit at full age Middle Income Worker $41,600 annual avg. ($20.00/hr) $1,543/month benefit at full age Higher Income Worker $84,032 annual avg. ($40.00/hr) $2,241/month benefit at full age % of earnings 57% 44.5% 32%

Why Windfall Provision? Years with 0 earnings under Social Security reduce average lifetime earnings figure The result: Your average FICA earnings are low and you look like a low-income worker even if your PERS earnings are high(er) Windfall reduces the higher replacement % intended for low income workers Windfall stops if a worker dies so survivor benefits are not reduced

Windfall Rules Recognizes the more years a worker has paid Social Security taxes on substantial earnings, the closer that person should be to the standard benefit formula. 30+ years = WEP doesn ’ t apply years = modified WEP 20 or fewer years = full WEP

WEP & Your Benefit Estimate Benefit estimates found using the “Estimate your Benefit” option found on Social Security’s internet home page do not figure windfall Online WEP & GPO Calculators & webinar for government workers are at: Windfall stops if a worker dies so survivor benefits are not reduced.

Medicare Automatic if you are getting Social Security benefits at 65 Contact SSA at age 65 if you are not getting benefits May apply on own Social Security record (many OPERS employees pay Medicare tax) or the record of a spouse -living, deceased, disabled, or divorced May file even if deferring cash payments

How to File Via the Internet at In the office or over the telephone For an appointment, call When to Contact Social Security Up to 3 months before you retire or attain age 62 If over age 62, review your work plans before Feb. 1 to determine when benefits could start Filing for Benefits

Online Services for Beneficiaries Change Address and Telephone* Request Replacement Medicare Card Request Benefit Verification Letter Request new 1099 for taxes Request Direct Deposit* *Request Password

21 Thank You !