Social Security rules like the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) markedly reduce Social Security benefits for nearly three million US retirees receiving pension income. Under WEP, individuals receiving retirement or disability pension income from public employers that don't withhold Social Security taxes from their salaries will see their Social Security benefits slashed. Almost two million Social Security recipients are affected by this law.
Furthermore, the GPO law, affecting around 800,000 retirees, offsets spousal benefits against pension income for those receiving pensions from a federal, state, or local government entity but haven't paid Social Security taxes. GPO can reduce Social Security benefits for spouses and surviving spouses to zero. For instance, if you receive $3,000 in monthly pension income from your work and are eligible for a $2,100 surviving spouse's benefit, the Social Security Administration will deduct two-thirds of your government pension ($2,000) from your spouse's Social Security benefit to offer your $100 monthly. The final payout could reach zero if the offset amount from your pension exceeds the Social Security benefit you are expected to receive. These rules can cause affected public workers to make difficult retirement choices like delaying retirement to avoid missing out on Social Security survivor benefits.
