Excerpt from “Social Security: Maximize Your Benefits”

Fireman and Fire Engine at Station

A Practical Example of How GPO Works

If you receive benefits based on your spouse’s earnings record and also receive a pension for your work that was not covered by Social Security, your monthly benefits may be affected by your pension and you may be subject to a reduction in benefits.  This type of Social Security benefit reduction is called a Government Pension Offset (GPO). For details see “The Government Pension Offset Fact Sheet” located at http://www.socialsecurity.gov/pubs/EN-05-10007.pdf .

Under the GPO, the Social Security Asministration (SSA) may reduce your spousal or widow(er) benefit. (For more information see www.socialsecurity.gov/retire2/gpo.htm.). For example, let’s say that the husband has a Social Security benefit of $1,800 per month and the wife has a state agency pension of $2,400 per month. The GPO will reduce her spousal benefits to zero. The following are step-by-step directions for calculating the GPO reduction:

  1. Wife’s Social Security spousal benefits $900 (as stated on the husband’s annual Social Security Statement).
  2. Wife’s government benefit of $2,400.
  3. Calculation of GPO for spousal benefit, $900 – 2/3 ($2,400) = $900-$1,600 = <$0.
  4. The Social Security Spousal benefit is reduced to zero.

 Let the Internet Do the Math For You

The SSA provides an online calculator that can assist you in calculating the amount of the GPO for your personal financial position.  The online calculator is located at the SSA Web page titled, “The Government Pension Offset Calculator” at www.socialsecurity.gov/retire2/gpo-calc.htm. The online calculator is specifically designed to assist you in estimating your Social Security benefit for work not covered by Social Security.


About ksindell

Kathleen Sindell, Ph.D. is the author of numerous academic, popular, and professional finance articles, Web sites, proposals, and books. This includes the bestselling reference book, "Investing Online for Dummies, Eds 1-5" (listed for two consecutive years on the Wall Street Journal's Bestselling Business Book List). Her most recent book "Social Security: Maximize your Benefits" has been listed in Amazon's Top 100 Bestselling Retirement Planning Books. It is important to note that "Social Security: Maximize Your Benefits, 2nd Edition" was just released. Sindell has an in-depth understanding of the financial services industry and has held Series 7, 63, and 65 licenses. Dr. Sindell is regularly tapped as a financial services expert on ABC World News, The Nightly Business Report, and at popular online and print outlets. Kathleen Sindell, Ph.D. is a member of the Board of Directors for the Financial Planning Association, National Capital Area (FPA NCA), is on the Editorial Advisory Panel of the Journal of Financial Planning, and is Co-Chair of the Metro Washington Financial Planning Day. Sindell is a Course Chair II, CFP Program Academic Officer, and adjunct full-professor at the University of Maryland, UMUC, School of Undergraduate Studies. Contact Information: ksindell@kathleensindell.com or 703-299-1700
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