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Saving for Retirement

Social Security Rules for Public Workers

Caution: The strategies to boost your retirement benefits may not apply if either you or your spouse ever worked in the public sector -- for federal, state or local government -- or for another organization not covered by Social Security, such as a public-school system. Under federal law, any Social Security benefits you earned will be reduced if you receive a public pension -- even if the annual estimated-benefits statement you receive from Social Security indicates otherwise.

Two rules affect Social Security benefits for current or former public-sector workers. If you apply for spousal or survivor benefits, you could lose some or all of your benefits under the Government Pension Offset (GPO) provision. The GPO reduces your spousal or survivor benefit by two-thirds of the amount of your government pension. So if you receive a public pension of $900 a month and you are entitled to a $1,000-per-month spousal benefit from Social Security, your spousal benefit will be reduced by $600 (two-thirds of your public pension), leaving you with a Social Security benefit of just $400.

A separate Windfall Elimination Provision (WEP) applies to workers covered by public pensions who are also entitled to Social Security benefits on their own earnings record. Unless you have at least 30 years of work covered by Social Security, the WEP may reduce your benefits -- by up to one-half of the amount of your public pension but not more than $380.50 per month for those who turn 62 in 2010. The WEP does not apply if you receive a military pension or a private pension. You can use a WEP calculator at to estimate your benefit.

Legislation has been proposed to eliminate both provisions, but no change is likely until Congress tackles the broader issue of Social Security reform.