We had been talking about our work histories and future plans. You need to know three facts:
- Massachusetts public-school teachers don’t contribute to Social Security, as we contribute (a lot!) to the Massachusetts Teachers’ Retirement System (MTRS).
- I had just come back to the public schools after working in the private sphere since 1981; in those intervening 17 years I had taught at two private schools (The Phoenix School and Boston University Academy) and had worked at various companies in the software industry during and after that 17-year period.
- “Teachers who have both MTRS and Social Security lose their Social Security benefits. Ronald Reagan put that rule in. He called it ‘double dipping’.”
I guess this list is really “two truths and a lie,” or at least “two truths and a gross exaggeration.” The third of the above “facts” isn’t a fact at all, it’s merely misinformation from my former colleague! Shocking, I know, from a Weston teacher.
And yet it does contain a kernel of truth, which we need to explore:
While I was working for Weston, 11% of my salary each year went into the state-mandated retirement fund (so don’t let anyone tell you that retirement pensions are some sort of taxpayer-funded gift from the state). Now that I’m retired, I receive two checks each month, one from the MTRS and one from Social Security. But the latter check is actually smaller than it was before I retired! Definitely not zero, as my former colleague erroneously stated, but smaller than it should be. (Again, this is my money, not the government’s money.) The problem is the “windfall elimination provision,” which is indeed partly attributable to Ronald Reagan. As the Kiplinger Report puts it with remarkable clarity:
Under federal law, any Social Security benefits you earned will be reduced if you were a federal, state or local government employee who earned a pension on wages that were not covered by Social Security.
Suppose… your full monthly benefit at 66 would be $1,372, which is reduced $372 by the windfall provision. If you claim at 62, your benefit would be reduced by 25%, to $750. For each year you delay past 66, you get an 8% delayed-retirement credit until you reach 70.
Is this fair? You be the judge. Who am I to say?