It’s as Clear as Mud – 2,700 Rules related to Social Security

I had conversation the other day with a CPA who questioned the need to run an analysis, since some of the claiming strategies (File & Suspend and the Restricted Claiming Provision) that were available have been eliminated.  I agreed with him on those two provisions were extremely attractive, but that there are still a number of reasons, why no one should claim until they run a thorough detailed analysis of all their options.  Here are just a sample of issues that have come up recently;

WEP / GPO and TRS Pensions

Nothing is more confusing than the WEP & GPO, which comes into play with individuals who will receive a pension from a job where they do not pay FICA  / Employment Taxes, mostly this is school teachers, fire and police.  The WEP (Windfall Elimination Provision) affects an individuals own Social Security benefits if they qualified (40 quarters of significant earnings).  Basically it is a reduction in benefits of approximately $500 per month or 50% of their Social Security check whichever is less.  The GPO (Government Pension Offset) deals with spousal benefits.  Here you basically have to take 2/3 of their pension and subtract it from spousal and or survivorship benefits.

These are extremely complex issues, and it is imperative that all aspects of both spouses retirement benefits be explored and integrated into the Social Security claiming decision.

ORP (Optional Retirement Plan)

Some school districts especially in Texas and cities offer an ORP in lieu of or in conjunction with their pension plans.  The thing to remember is that if it is funded with dollars where the individual did not pay Employment Taxes (FICA) the WEP and GPO are still in effect.  I’ve had several individual who thought they could take a lumpsum distribution at retirement or roll the money over into an IRA in hopes of avoiding the WEP or GPO.  That is not the case when one files for Social Security benefits one of the questions is will you receive retirement benefits from a job where you did not pay FICA taxes?  If you take the lump sum benefit SSA will look at the gross amount and determine it as a lifetime annuity and 2/3 of that check will be subtracted from spousal or survivorship SSA benefits.


If one claims benefits and still have children under 18 years of age the children can receive benefits up until age 18 or they graduate from high school.  This has become quite prevalent especially now where grandparents are raising their grandchildren.  However, in order for the child to claim benefits they must be legally adopted by the grandparent.  This is a hairy subject and many grandparents may not want to breach this matter with a child that may be struggling to get their life back in order.

Survivorship Benefits

At least once a month I’m referred to a recent widow who wants to know their options for.  If they go to SSA for advice almost every time they’re told to claim survivorship benefits as soon as possible, because its more!  Now there are major problems with this advice:

  • They can claim survivorship benefits at age 60, but there will be a 28.5% reduction in benefits for the rest of their lives which could be several decades.
  • If they are working the Earnings Test is still in play (lose $1 in benefits for every $2 they make in excess of $19,560 per year). So not only are the subjected to a penalty for claiming prior to the FRA, they’ll have benefits withheld if they are still working!
  • If they quit their job in order to collect benefits, what will they do for health insurance until they reach age 65 and can claim Medicare?
  • If retired or earning less than $50,000 per year, I almost always recommend that they claim on their own record at 62 and wait until their FRA (Full Retirement Age 66 – 67) to claim Survivorship Benefits. At FRA they receive 100% of their deceased spouses benefits and they are no longer subject to the Earnings Test.
  • If their own Social Security benefits are greater than their survivorship benefits, we might claim survivorship benefits at age 60 and wait until age 70 to switch to their own record. The Earnings Test will still apply.
  • Finally, if they are not yet 60 years of age, I tell them not to remarry until they reach age 60 since marriage prior to 60 negates survivorship benefits on the deceased spouse.


It’s been almost 10 years since I started consulting on Social Security issues and not a month that goes by where I’m not researching or learning of a new twist or issue.  This is truly 3 Dimensional Chess there are no cookie cutter answers because we are all unique with different expiration dates.

Never hesitate to reach out if you think I can be of assistance.  As I’ve said on numerous occasions, no one should ever claim benefits until they understand all the options!

Welcome to Fall,

Dave Zander, CFP®
MLS# 1603774