Strategies to Mitigate or Eliminate the Government Pension Offset (GPO)

Chris Reddick |


The Government Pension Offset (GPO) can significantly reduce or eliminate Social Security benefits for individuals who receive a government pension based on work not covered by Social Security. While the GPO can present challenges, some strategies can help mitigate its impact. This blog post explains the GPO, provides an example, and explores strategies to minimize or eliminate the GPO.

GPO Explained

The GPO is a provision in the law. It can eliminate or reduce Social Security benefits for individuals who receive a government pension based on work not covered by Social Security. This means you work where your employer does not pay into Social Security. You will notice on your pay stub or W-2 when you file your taxes that Social Security has not been withheld. This is commonly found in teacher pension plans, especially in Texas. So beware of the GPO and learn how it can apply to you.

The GPO reduces your Social Security benefit by two-thirds of your government pension. The GPO only applies to spousal or survivor benefits, not individual retirement benefits based on your work history. Keep that in mind. If you work and are covered by Social Security, you will get benefits based on your work record.

To ensure fairness, your Social Security survivor's benefit would be reduced since you received the benefit of not paying into Social Security. Most teachers would say this is not fair, but Congress needs to pass legislation to change the law, so until then, this blog post talks about strategies to reduce or eliminate the GPO. At this point, it is unlikely that the law will change, so you need to plan accordingly.

Example of the GPO

To understand the GPO, an example can be used of Mary, a teacher in a Texas public school. Mary worked as a teacher for a state government and received a government pension based on her non-covered employment. Her monthly government pension amount is $1,500. Based on her husband's work record, she is also eligible for Social Security spousal benefits.

Without the GPO:
If Mary's government pension did not fall under the GPO, she would be eligible for the full amount of her Social Security spousal benefits. Let's assume her calculated spousal benefit amount is $1,200 per month.

With the GPO:
However, due to the GPO, Mary's Social Security spousal benefits will be subject to an offset since she is receiving Social Security and her pension. The GPO reduces her benefit amount by two-thirds of her government pension. In this case, the reduction would be:

(2/3) * $1,500 = $1,000

Thus, Mary's Social Security spousal benefits would be reduced by $1,000. Her actual benefit amount would be:

$1,200 - $1,000 = $200 per month

So, instead of receiving the full $1,200 in Social Security spousal benefits, the GPO reduces Mary's benefits to $200 per month. Yikes!

This reduction occurs because the GPO aims to prevent individuals from receiving their government pension and full spousal benefits based on their spouse's work history, considering the retirement income in the form of the pension they already receive from their non-covered employment. The two-thirds reduction in spousal Social Security benefits is terrible, so what strategies can you proactively use to reduce or eliminate the GPO?

Strategies to Reduce or Eliminate the GPO

1. Understand the GPO Rules:
To develop effective strategies, it's crucial to thoroughly understand the GPO rules and how they apply to your specific situation. Familiarize yourself with the requirements, exemptions, and exceptions outlined on the Social Security Administration website. Gaining this knowledge will provide a solid foundation for developing personalized strategies. Check out the Social Security website, which has a handy calculator to help you figure out the GPO.

2. Maximize Covered Work Credits:
One strategy to minimize the impact of the GPO is to increase your work history covered by Social Security. If you have the opportunity to work in a job that qualifies for Social Security coverage, it can help you accumulate substantial earnings and credits. A more extended history of substantial earnings can potentially reduce or eliminate the GPO reduction. Perhaps as a teacher, work in the summer in a job where Social Security covers you.

3. Spousal Benefit Coordination and the last 60-month rule:
If you're married and eligible for Social Security spousal benefits, coordinating your retirement plans with your spouse can be advantageous. You may optimize your overall retirement income by strategizing how and when you and your spouse claim Social Security benefits. This coordination can help offset any reduction caused by the GPO. This could involve working in another job that pays into Social Security or using the last 60-month rule. You paid Social Security taxes on your earnings during the last 60 months of government service; the GPO will not apply. This would involve getting a job at a school district or other state government agency that pays into Social Security at the same time as paying into your government pension for at least 60 months.

4. Delay Social Security Claiming:
Delaying the claiming of Social Security benefits beyond your full retirement age (FRA) can increase your benefit amount. By waiting, your benefit will accrue delayed retirement credits, which can lead to higher monthly payments. Delaying the start of Social Security benefits can be particularly beneficial if you're subject to the GPO, as it reduces the overall impact of the offset. There are delayed credits for not taking Social Security at age 62, the earliest you can take it. You can increase your Social Security benefit by delaying until age 70.

5. Explore Alternative Retirement Plans:
This is extremely important and doable to save beyond your government pension for retirement. If the GPO significantly affects your Social Security benefits, consider exploring alternative retirement plans and investment strategies. For instance, contributing to an individual retirement account (IRA), a 403(b) plan, or other investment vehicles can help generate additional retirement income. If you have a 403(b) available, take advantage of this and save what you would have saved into Social Security into the 403(b) plan.

6. Seek Professional Guidance:
Navigating the complexities of the GPO requires careful consideration of your unique circumstances. It's highly recommended to seek professional guidance from financial advisors specializing in retirement planning. The financial advisor can evaluate your situation, provide personalized strategies, and offer valuable insights to help minimize the impact of the GPO.


While the Government Pension Offset can pose challenges, implementing effective strategies can help mitigate its impact and maximize your retirement income. Understanding the GPO rules, coordinating with your spouse, maximizing covered work credits, delaying Social Security claiming, exploring alternative retirement plans, and seeking professional guidance are key steps to minimize or eliminate the effects of the GPO.

It's important to note that the specific calculations and reductions can vary depending on individual circumstances and factors such as the government pension amount and other applicable rules. Consulting with the Social Security Administration or a financial advisor is recommended for personalized information regarding the GPO's impact on your situation. By taking proactive measures, you can work towards securing a more financially stable retirement. Contact me on the page below if I can be of service to work on strategies to mitigate or eliminate the GPO.


*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on to avoid Federal Government tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in estate planning should work with an estate planning team, including their legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.


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