For retirees affected by the Government Pension Offset, it is possible that you are entitled to a greater benefit according to an audit conducted by the Office of the Inspector General. In fact, if you claimed widow(er) benefits before full retirement age – the chance is pretty good.
Before you get excited, you need to accept that whether you get that increase or not depends a lot upon the amount of work you are willing to invest in getting the benefits to which you are entitled.
For a bit of background… An audit by the Office of Inspector General (OIG) concluded that the Social Security Administration had failed to sufficiently inform retirees claiming widow(er) benefits about the long-term implications of claiming benefits before normal retirement age.
According to the audit, the mistake cost retirees approximately $42.6 million in additional benefits over their remaining life expectancies, or $28,000 per retiree on average.
To illustrate, a woman applied for reduced widow’s benefits of $704 at age 60 in April of 2011. According to the audit, she would have received $1,068 if she had waited until full retirement. The woman did not receive benefits in 2011 because her GPO offset was $1,009.
In her case, the decision to claiming benefits (that she didn’t receive) has cost her an estimated $26,624 over her expected lifetime. (The cost is more but we will get to that).
In brief, the decision to claim widow(er) benefits before full retirement age is a very expensive option because Social Security benefits grow quickly as the penalty for early claiming wears off. The GPO offset, on the other hand, tends to remain constant during this period of time. In total, it is entirely possible that the mistake of claiming widow benefits early will mean that you do not collect benefits – ever.
The audit mentioned above concluded that the Social Security Administration was at fault for failing to provide sound guidance to retirees whose benefits were subject to the GPO provisions. The agency acknowledged the issues identified in the audit, and accepted the recommendations of the inspector general.
In the best of all worlds, this problem should be solved. That isn’t the case – for most seniors.
As part of the resolution to the audit, the Social Security Administration agreed to send a letter advising the widow(er) beneficiaries of their option to delay, or withdraw and resubmit, their application for widow(er)’s benefits. Thus, it is incumbent upon the retiree to know about this problem and to know how to fix it.
The basis of the audit is the retiree is ultimately at fault for the consequences of choosing the wrong filing date – even if the SSA provided bad advice. It is incumbent upon the retiree to fix a mess that should never taken place.
The letter informs the reader that their records have been part of an audit of accounts subject to GPO. It tells the reader that they are not getting any benefits – something the reader likely already knows. Further it tells the reader that they have the option to re-file their benefits. It does not explain why re-filing may generate benefits by the tens of thousands.
The letter essentially repeats the process that created the problem in the first place. It fails to inform the retiree that early benefit claiming tends to hurt those subject to GPO more than anyone else. The discount for claiming early rises to nearly 30% – the GPO offset doesn’t change for those who claim widow(er) benefits before full retirement age.
Moreover, benefit levels of pensions subject to GPO grow at different rates from Social Security. While every Social Security beneficiary has a cost of living protection, not all pensions subject to the GPO match that feature. It is likely that the COLA (cost of living adjustment) at the time of the audit was not indicative of the actual experience so the estimate of $28,000 may well come up short of reality.
| Year | Benefit At NRA | Reduced Benefit | Estimate Inflation | Non/SS Pension | GPO | Benefit/mo for Claiming Age 60/NRA |
| 2021 | $2.000 | $1,430 | 5.9 | $3,200 | $2,133 | $0/$0 |
| 2022 | $2,118 | $1,514 | 8.3 | $3,200 | $2,133 | $0/$0 |
| 2023 | $2,293 | $1,640 | 3.0 | $3,200 | $2,133 | $0/$160 |
| 2024 | $2,433 | $1,740 | 3.0 | $3,200 | $2,133 | $0/$300 |
If You Are Subject to the GPO
This article is not intended to provide you individual advice on claiming strategies. It highlights a problem with past strategies. If you find yourself in this situation, you need to take the SSA’s advice (see below). A financial planner can likely provide you with assistance.
If you are subject to the GPO and claimed spousal or widow(er) benefits before full retirement age, you are likely getting a lot less than you should.
The Social Security Administration says that you can find details about your claim on the “Check Your Benefits” page with a My Social Security account in the “Benefit & Payments Details” tab.
Further, the agency suggests that “people who have questions or wish to re-file an application for spousal/widow(er) benefits should contact their local office for assistance.” If you call Social Security, you will need the name of the audit: “Benefits Payable to Widow(er)s Subject to Government Pension Offset Had They Delayed Their Application”. (see A-09-19-50791.)
