Evelyn Paternostro, who is eighty-four, works part-time as a cashier at Dollar Tree. She worked as a teacher and administrator in Louisiana for many years, dedicating her life to education. She has served the public for years but still finds it challenging to make ends meet.
“I am frequently asked at the store if I am doing this for pleasure. She said, “Why aren’t you retired?” “Because I need to eat.”
Paternostro learned that two federal laws, the Windfall Elimination Provision, and the Government Pension Offset, prevented her from receiving her husband’s Social Security payments after his death.
For millions of Americans who receive a public pension that does not withhold Social Security tax, these rules diminish or eliminate their Social Security payments. Retired educators, firefighters, and other public employees are most affected.
Her words, “I was blindsided,” “I was aware that I would be retiring as a teacher. The Louisiana Teachers Retirement System was supposed to include me. Additionally, I never gave my husband’s salary or what it would mean to me any attention.
Who is Affected?
Both WEP and GPO affect around 2.8 million people in the United States. All state, county, municipal, and special district workers in 26 states are affected. It also involves teachers in 13 states, including some districts in Georgia and Kentucky.
Teachers are the only municipal employees affected in Massachusetts and several Rhode Island districts.
Jill Schlesinger, a business expert for CBS News, says these two initiatives from the 1980s aimed to prevent people from “double dipping” into Social Security and a federal pension.
People who get a pension from a job where they did not contribute to Social Security but are eligible for Social Security benefits through their employment are impacted by the Windfall Elimination Provision.
It may cut their Social Security benefits by as much as half of what their pension would have been.
Michelle Cosgrove’s payments, for instance, will be slashed by $557 to $601, almost halving. Before remaining home to raise her kids, Cosgrove worked as a paralegal for the first part of her career, contributing to Social Security.
She then started working as a public school teacher in the San Francisco Bay Area, contributing to California’s educator pension system, CalSTRS. But when she learned about the complexities of the pension system, her retirement plans took a surprising turn.
Cosgrove’s diminished income after retirement impacted her capacity to make ends meet and pay her obligations.
Following the death of her husband, Mike, in 2022, Cosgrove was further affected by the second policy, the Government Pension Offset. She worked in the private sector for decades and paid into Social Security, but the GPO prevented her from accessing his payments. At 52, Mike, a welding supervisor, received a rare cancer diagnosis, but he kept working until his condition deteriorated. At age sixty-three, he passed away.
Pension beneficiaries may have reduced survivor benefits or may not get payments at all if they are the widows or widowers of someone who receives Social Security benefits.
“If I’d have stayed home and done nothing, I’d have gotten all the money,” stated Cosgrove. “I might not have chosen to become a teacher if I had known this. I would have chosen a different option.
According to Joslyn DeLancey, vice president of the Connecticut Education Association, “Many of those individuals were likely teachers and married to someone who worked in a Social Security job, which is why you see the numbers of the GPO elevated.” “They won’t receive the spousal Social Security benefit. It’s such a complex and disorganized matter.
Paternostro said her Social Security payments would have been $2,500 monthly or almost $300,000 over the previous ten years.
She remarked, “That’s a lot of money.” I don’t know how much money that is.
But Dede Ruel, a retired school psychologist in Illinois, experienced a different type of pain as a result of these rules.
According to her, she just received a notice from Social Security stating that her benefits were reduced by 21% because she owed over $13,000. As per a CBS News review of government data, these regulations are among the most frequent causes of Social Security overpayment exceeding $450 million in fiscal years 2017–2021.
“Every time I’ve tried to appeal it through their process, I’ve been turned down,” Ruel said.
“State and local government employers are required to disclose potential effects of WEP/GPO on newly hired non-covered employees,” the Social Security Administration’s press office said in remarks following the story’s first publication.
According to a Social Security representative, “Social Security issues correct payments in most cases, and we work to pay the right people the right amounts at the right time.” People rely on the agency to avoid overpayments and underpayments; thus, there is still an opportunity for improvement.
Support for the Social Security Fairness Act from both Parties:
During this session, removing WEP and GPO is the goal of the Social Security Fairness Act, one of the most bipartisan legislation in Congress.
On November 12, the House passed the measure. This week, a vote on the Social Security Fairness Act is anticipated in the Senate.
Unless the cost and income structure of Social Security is changed, the fund is anticipated to run out of money in 2035.
While proponents of the Social Security Fairness Act contend that it will only deplete the Social Security fund six months earlier than anticipated, some opponents argue that there are better ways to solve the problem and advise states to reorganize their retirement systems to deal with the underlying issues instead of depending on federal fixes.
According to Schlesinger, many opponents predict this will cost nearly $200 billion over the next ten years. According to critics, people are forced to pay into the Social Security system for a reason. These two systems are distinct from one another. Let’s fix Social Security if it has to be fixed. We shouldn’t just repeal it, which is only a Band-Aid solution.
“People should receive benefits based on what they paid into the system,” stated Rep. Garret Graves, a Republican from Louisiana who led the bill’s development. That should be the main foundation of the formula. Although I appreciate the efforts made in the 1970s and 1980s, the overcorrection cost these people between $600 and $700 billion in benefits.
Financial consultant Devin Carroll frequently deals with customers who are “completely surprised.” Carroll often advises his customers to utilize the WEP calculator provided by the Social Security Administration, which computes benefits while accounting for the impact of the WEP.
Carroll notes that estimating future Social Security income might be difficult. “Bend points,” part of the benefits calculation, are modified yearly by salary inflation.
Since the WEP reduction’s absolute amount is decided the year a person reaches 62, these modifications are essential.
Carroll clarified that you must make certain assumptions and estimates regarding inflation in the future, including both price and wage inflation. Once you’ve done so, you may begin working through it and use a calculator, such as the one provided by the Security Administration, to determine your WEP adjusted for retirement age benefit.
Carroll also has the opportunity to observe directly the effects of these laws. His son works as a fireman in Texas, and his daughter-in-law teaches.
According to Paternostro, this money has essentially been stolen from all of us throughout the years. It’s unfair.
