Ask Larry: Does Moving To Arizona Really Exempt Me From Social Security’s WEP?

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Today’s column addresses questions about whether moving to another state can exempt a person from the Windfall Elimination Provision, when to file for survivor’s benefits while still potentially earning income and when spousal benefits can still be available. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

Does Moving To Arizona Really Exempt Me From Social Security’s WEP?

Hi Larry, I’m a retired California teacher. I recently moved to and plan to spend rest of my life in Arizona. My new neighbors, also from out of state, explained to me that since Arizona is not a ‘windfall tax state,’ the federal government cannot enforce the WEP or the GPO on my benefits.

They told me it’s in the state law and it’s rock solid exemption from those federal provisions. This would be obviously great for me if it’s true. Is it really true? Thanks, Ted

Hi Ted, It’s not true.

Social Security is a federal program, and the same rules apply no matter what state you live in.

If you’re receiving a pension based on your earnings that were exempt from Social Security taxes, then your Social Security retirement benefit rate will be subject to reduction due to the Windfall Elimination Provision (WEP) regardless of where you worked and where you live.

And any spousal or survivor’s benefits you may be eligible for could be reduced or wiped out by the Government Pension Offset (GPO) provision. Best, Larry

Does It Make Sense To File For Survivor Benefits If I’m Working?

Hi Larry, My wife passed away five years ago after 29 years of marriage. Her Social Security retirement benefit would have been a lot less than mine. I turn 60 this year and can file for survivor benefits.

However, I am confused about whether I should file this year or not. I am currently laid off and I’m thinking of making it permanent by retiring. But I am also expecting a job offer. If I take the offer, then I will make at least $80,000. This is of course above the exempt amount.

So does it make sense to file for the survivor benefit if I am working. Thanks, Mark

Hi Mark, I’m sorry for your loss. It sounds like your best option would be to file for widower’s benefits as soon as your earnings will allow you to collect at least some benefits, and then switch to your own benefits at 70.

You should be able to collect benefits for any months that you’re at least 60 and not working, so if you’re still laid off when you turn 60, it may be best to start collecting then. If you subsequently resume working, you just need to make sure you let Social Security know as soon as possible so that they can start withholding your benefits as needed.

If you’re already back to work by the time you turn 60, then your best filing strategy would depend on your survivor rate and the amount of your earnings. You may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to fully analyze the options available to you in order to determine your best strategy for maximizing your benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry

Can My Husband Collect An Additional Amount As A Spouse?

Hi Larry, I took my Social Security retirement benefits at 62. My husband who is younger than me recently turned 66. Can he collect an additional spousal benefit based on my record? I remember being told that spouse can also claim half of the benefit amount. Thanks, Ellie

Hi Ellie, Assuming that your husband was born after 1/1/1954, he can’t apply for spousal benefits without also applying for his own benefits at the same time. He could then only be paid essentially the higher of the two benefit amounts, so he’ll only be eligible for spousal benefits if 50% of your primary insurance amount (PIA) is higher than your husband’s own 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). Best, Larry

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