Q: I am retiring under CSRS on Dec. 31. I will be 66 at retirement. I have not yet claimed Social Security. I have 35 years of federal service. I understand that Social Security will offset my federal monthly pension. If for example, my Social Security is $500 a month and my federal pension is $4,000, how do I figure out how much it will be reduced? Also, is the offset taken even if I don’t claim Social Security? I receive a survivor benefit from my deceased husband. Will my husband’s survivor benefit affect my monthly pension. Also, how will state taxes be taken from my pension. I have to submit a form for federal tax but no tax form for state tax.
A: When you retire, it’s your Social Security benefit that will be affected, not your CSRS annuity. Here’s why. Because you will be receiving an annuity from a retirement system where you didn’t pay Social Security taxes, you’ll be subject to the windfall elimination provision. The WEP will reduce, but not eliminate, that benefit unless you have 30 or more years of substantial earnings under Social Security. Receiving a survivor benefit from your late husband won’t have any affect on either your annuity or your own Social Security benefit. However, if you are entitled to a Social Security survivor benefit, you’ll be subject to the government pension offset. The GPO would reduce that benefit by $2 for every $3 you receive in your CSRS annuity.
