As a Texas Teacher will I get Social Security?
It depends. There are two important laws that Texas teachers should know about that can impact whether you will receive Social Security.1
The Windfall Elimination Provision or WEP and the Government Pension Offset or GPO. Both of these laws can reduce or entirely eliminate a Social Security benefit. This will depend upon whether you as a teacher qualify for the Teachers Retirement System or TRS and did not pay into Social Security.
Whether you get Social Security can be confusing for Texas teachers since many of them have held previous jobs where they have paid into Social Security. For example, you could be a teacher who is a career changer from a job that paid into the system for many years and expects some benefit from previous employment.
The sad news is that you really cannot learn about whether these two reductions apply to your social security benefit until you actually apply for Social Security benefits. Since you will only get a clear idea of what is going to happen to your Social Security benefit when you retire as a teacher so it is important to know what to expect.
Windfall Elimination Provision
The WEP just recalculates your Social Security benefit if you have a previous position where you paid into Social Security. The maximum monthly WEP for 2020 is $480 for 20 or fewer years of employment in a covered job. The WEP completely phases out if you worked 30 or more years in a previous job where you paid into Social Security. One way to completely eliminate the WEP is to work part-time or take on another job after teaching to get the 30 years of required work. This could be worth an additional $100,000 of extra income over a 20-year retirement!2
Government Pension Offset
The GPO is that if you are entitled to Social Security benefit based as a survivor or spouse and have a TRS pension where you did not pay into Social Security your survivor or spousal benefit will be reduced by 2/3rds of your pension.
For example, if you get a monthly TRS pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits. For example, if you’re eligible for a $500 spouses, widows, or widowers benefit from Social Security, you’ll get $100 a month from Social Security ($500 – $400 = $100). If two-thirds of your government pension is more than your Social Security benefit, your benefit could be reduced to zero.3
Worst Case Scenario
If you have never paid into Social Security and only qualify for TRS it is likely you will not receive any Social Security benefit.
What are your options?
If you are a teacher in Texas and do not pay into Social Security you should be proactive and save extra each month into a 403(b) plan. Teachers in Texas can defer in 2020 up to $19,500 per year into a 403(b) plan and an additional $6,500 if 50 and older. You can use this to supplement your retirement pension from TRS. Other options are to work part-time or enough covered years to completely eliminate the WEP. Teachers are well-advised to contact the Social Security Agency to learn more about their benefits. It is also best to talk to a financial planner to see what options work best with your retirement goals.
*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 for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us 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.