Hi Larry,
As of the writing of this question, I am 52 and my wife is 50. On December 31, 2013 I retired from a Career with the State Police with a full pension. My current pension is roughly $101,000 and increases by $360 per year. When I left the State Police, I took employment in the federal government and remain employed by the federal government. I now have enough quarters for social security benefits and when I go to the mysocialsecurity website it says:
You have earned enough credits to qualify for retirement benefits. At your current earnings rate, your estimated payment would be:
At full retirement age (67): $2,042 a month
At age 70: $2,772 a month
At early retirement age (62): $1,210 a month
My wife currently works part time as a teacher's aide and may qualify for a state pension someday for a couple hundred dollars a month. She was a stay at home mom and does not have enough quarters for social security benefits.
Additionally, When I pass (Assuming I go first), my wife will get 66% of my state pension for the rest of her life.
I'm confused by this whole WEP/GPO thing and a lot of the Q&A I read online does not have numbers like mine.
How will WEP/GPO effect my wife and I? What will someone like me get from Social Security, and will I or my wife ever see a return on my investment before I die? And will she get benefit (or reduced benefit) after I die?
Thank you,

-Andy

Hi Andy. I'll start out by clarifying that the Windfall Elimination Provision (WEP) can only apply to Social Security retirement and disability benefits that are payable based on a person's own earnings history. Conversely, the Government Pension Offset (GPO) provision can only affect spousal or survivor benefits, not Social Security retirement or disability benefits. Furthermore, the only type of pensions that count for WEP or GPO purposes are pensions based on a person's OWN non-Social Security covered earnings. If a person receives a spousal or survivor pension based on their spouse's non-Social Security covered earnings, that would not affect any type of Social Security benefits for which they qualify.

I assume what you're saying is that you didn't pay Social Security taxes on the wages on which your state police pension is based, and that your wife's earnings as a teacher are also exempt from Social Security taxes. Therefore, since you're receiving a non-covered pension based on your own earnings, your Social Security retirement benefit rate will probably be reduced due to WEP (https://www.ssa.gov/pubs/EN-05-10045.pdf). Any such reduction would also affect your wife's spousal benefit rate, because unreduced spousal benefits are calculated based on 50% of the worker's primary insurance amount (PIA). A person's PIA is equal to their Social Security retirement benefit rate if they start drawing their benefits at full retirement age (FRA). In other words, assuming that WEP causes your PIA to be reduced, your wife's spousal rate would also be lower since it will be based on a percentage of your PIA.

However, Social Security survivor benefits are calculated based on the deceased worker's benefit rate without considering WEP. So, if you die before your wife, her unreduced widow's benefit rate would be based your benefit rate BEFORE ANY WEP REDUCTION. But, if your wife is receiving a teacher's pension based on her own non-covered earnings, any Social Security spousal or survivor benefits for which she qualifies would be offset by 2/3rds of the amount of her teacher's pension.

Here's an example. Let's say Bob is receiving a state pension based on his earnings that were exempt from Social Security taxes, and his monthly state pension amounts to $3000. Bob's Social Security PIA would normally be $2000, but his PIA is reduced to $1500 due to WEP. Bob's wife, Barb, isn't eligible for Social Security retirement benefits based on her own earnings. If Barb files for spousal benefits at her FRA, her spousal rate would be $750, or 50% of Bob's WEP reduced PIA. However, Barb also receives a $300 monthly state pension based on her own non-Social Security covered earnings. As a result, GPO causes Barb's unreduced spousal rate to be offset by $200, or 2/3rds of her state pension. Thus, if Barb files for spousal benefits at FRA she'd be paid $550 (i.e. $1500/2 - $200).

Carrying on our example, let's say Bob dies after Barb has reached FRA. Bob started drawing his Social Security retirement benefits at his FRA, so he was receiving his WEP reduced PIA of $1500. But, Barb's widow's benefit rate would be based on Bob's PIA without the WEP reduction, or $2000. GPO would still offset Barb's widow's benefit amount by $200, though, giving her a net widow's benefit rate of $1800 (i.e. $2000 - $200).

In our example above, Barb could still be paid $1800 as a widow even if she was eligible for a separate survivor pension based on Bob's state pension. Thus, if your wife collects a survivor pension based on your state police pension, it won't have any adverse affect on the amount of her Social Security widow's benefit.

Best, Jerry