Preparing for retirement doesn’t happen overnight. It’s a process that should start well in advance of your anticipated retirement date.
Whether you’re nearing the end of your career or just getting started, it’s never too early to start thinking about retirement planning.
SOME OTHER THINGS YOU SHOULD CONSIDER:
Retirement Process Guide
Choosing a Retirement Date
SOCIAL SECURITY REDUCTIONS
The pension that is received from a governmental agency such as the City of San José, may reduce any Social Security benefits you are eligible for, either through your previous employment in a job where you did contribute to Social Security or through the spouse's or widow's benefit.
There are two laws that may reduce your benefits. They are the:
- Windfall Elimination Provision - This provision affects the way your Social Security or disability benefits are figured if you also receive a pension from the City of San José. See: Windfall Elimination Provision
- Governmental Pension Offset - This offset affects Social Security benefits that you may receive as a spouse or widow of a Social Security recipient. In other words, if you are eligible to receive Social Security benefits because you have or had a spouse who paid into the Social Security system, the pension you receive will be reduced if you also receive a pension from the City of San José.
GOVERNMENTAL PENSION OFFSET
The purpose of Social Security spouse's or widows benefit is to provide income to wives or husbands who have no Social Security benefits on their own. It was intended for husbands and wives who were financially dependent on their spouses. Without the offset a person who qualified for a governmental pension, such as San José's retirement plans, was also eligible to collect from Social Security even though they were not dependent on their husband or wife.
WHO IS AFFECTED BY THE OFFSET
All retirees who receive a monthly allowance from the City of San José and are also eligible to receive Social Security benefits because they are a widow or spouse of a Social Security recipient are affected. However, the following individuals would be exempt from the offset.
- Anyone who received or who was eligible to receive the governmental pension before December 1982 and who meets all the requirements of Social Security spouse's benefits in effect in January 1977. (This includes divorced woman whose marriage lasted at least 20 years and a husband or widower who received 1/2 of his support from his spouse.)
- Anyone who received or was eligible to receive a Federal, State or local government pension before July 1, 1983 and was receiving 1/2 of their support from her or his spouse.
HOW MUCH THE OFFSET WILL BE
The amount of your Social Security spouse's or widow's benefit will be reduced by 2/3 of the amount of your San José pension. For example, if you receive $1,200 monthly from San José, 2/3 of that or $800 will be subtracted from the amount that you receive from Social Security. If you are eligible to receive $900 for a widow's benefit, you will only get $100 from Social Security because of the offset. (900-800=100).
This offset will not affect Medicare benefits at age 65 if you receive them under your spouse's record.