Can I Receive Social Security and Pension Benefits at the Same Time?

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Social Security benefits provide financial support for millions of Americans in retirement. But what happens if you also have a pension? Can you collect both? The answer is yes—but it’s not always straightforward. This article explains how Social Security and pensions work together, when one might affect the other, and how to make the most of both benefits.

Understanding the Basics: Social Security and Pensions

What is Social Security?

Social Security is a federal program that provides benefits to retirees, disabled individuals, and families of retired, disabled, or deceased workers. The program is funded through payroll taxes, with both employees and employers contributing.

To qualify for retirement benefits, you generally need to earn 40 “credits” throughout your working life (typically 10 years of work). The amount you receive depends on your earnings history and the age at which you begin collecting benefits.

You can start receiving reduced Social Security retirement benefits at age 62, but your full retirement age (FRA) ranges from 66 to 67, depending on your birth year. Waiting until age 70 to claim benefits will result in a larger monthly payment.

Check your estimated benefits through the Social Security Administration’s website.

What is a Pension?

A pension is a retirement plan that provides monthly income after you retire. Unlike Social Security, pensions are typically offered by employers as part of your compensation package. There are two main types:

1. Defined benefit plans: These traditional pensions guarantee a specific monthly payment amount in retirement, calculated based on your salary history and years of service.
2. Defined contribution plans: Plans like 401(k)s and 403(b)s where you and possibly your employer contribute money that grows through investments. These aren’t technically pensions but are sometimes referred to as modern pension alternatives.

For this article, when we refer to “pensions,” we’re primarily talking about defined benefit plans.

The Short Answer: Yes, You Can Receive Both

Yes, you can generally receive both Social Security benefits and pension payments at the same time. However, certain types of pensions may reduce your Social Security benefits through what’s known as the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO).

Whether your benefits will be affected depends on the type of pension you have and whether you paid Social Security taxes on the earnings that contributed to your pension.

When Pensions Don’t Affect Social Security Benefits

If you worked for a private company, a nonprofit organization, or a government agency that participated in the Social Security system, you likely paid Social Security taxes on those earnings. In this case, your pension will not reduce your Social Security benefits.

Most private-sector pensions fall into this category. If you worked for a company like General Motors, AT&T, or IBM and earned a traditional pension, you can collect your full pension and your full Social Security benefit without any reduction.

When Pensions Might Reduce Social Security Benefits

Two provisions may reduce your Social Security benefits if you receive certain types of pensions:

The Windfall Elimination Provision (WEP)

The Windfall Elimination Provision may reduce your Social Security benefits if you receive a pension from work where you didn’t pay Social Security taxes. This typically applies to:

• Federal civil service employees hired before 1984
• Employees of some state and local governments that don’t participate in Social Security
• Workers in foreign countries

The WEP changes how your Social Security benefit is calculated, potentially reducing it by up to $512 per month in 2023. However, the reduction cannot be more than half of your pension amount.

The WEP doesn’t apply if:

• You have 30 or more years of “substantial earnings” under Social Security
• You were a federal employee hired after December 31, 1983
• You were employed by a nonprofit organization that only became subject to Social Security tax beginning January 1, 1984, and you were at least age 55 on that date
• Your only pension is from railroad employment

To see if the WEP affects you and estimate its impact, use the SSA’s WEP calculator.

The Government Pension Offset (GPO)

The Government Pension Offset affects Social Security spousal or survivor benefits if you receive a pension from a federal, state, or local government job where you didn’t pay Social Security taxes.

Under the GPO, your Social Security spousal or survivor benefit will be reduced by two-thirds of your government pension. For example, if your monthly government pension is $900, two-thirds of that is $600, so $600 will be deducted from your Social Security spousal or survivor benefit.

The GPO can completely eliminate your Social Security spousal or survivor benefits if two-thirds of your government pension is greater than your potential Social Security benefit.

The GPO doesn’t apply if:

• Your government pension isn’t based on your earnings
• You’re a federal employee who paid Social Security taxes on your earnings after December 31, 1983
• You paid Social Security taxes on your government earnings for the last 60 months of government service

Use the SSA’s GPO calculator to estimate how the GPO might affect your benefits.

Private Pensions and Social Security: Working Together

If you have a private pension from an employer that participated in the Social Security system, here’s what you need to know:

Timing Your Benefits

You can start receiving your private pension and Social Security at different times. The timing depends on:

1. Pension rules: Some pensions allow you to collect as early as age 55, while others require you to reach a specific age or years of service.
2. Social Security rules: You can start collecting reduced benefits at 62, full benefits at your full retirement age (66-67 depending on birth year), or increased benefits if you wait until age 70.

Many financial advisors suggest coordinating your benefits based on your overall financial situation. For example, if your pension provides sufficient income, you might delay claiming Social Security until age 70 to maximize those benefits.

Tax Considerations

Both pension income and Social Security benefits may be subject to federal income tax:

• Pension income is typically fully taxable as ordinary income, though a portion may be tax-free if you made after-tax contributions to the plan.
• Social Security benefits may be partially taxable depending on your “combined income” (adjusted gross income + nontaxable interest + half of your Social Security benefits):
  • For individuals with combined income between $25,000 and $34,000, up to 50% of benefits may be taxable
  • For individuals with combined income above $34,000, up to 85% of benefits may be taxable
  • For joint filers with combined income between $32,000 and $44,000, up to 50% of benefits may be taxable
  • For joint filers with combined income above $44,000, up to 85% of benefits may be taxable

Receiving both pension and Social Security income could push you into a higher tax bracket or increase the amount of your Social Security benefits subject to tax. Consider consulting with a tax professional to develop strategies for managing your tax liability.

Special Considerations for Government Pensions

Federal Government Employees

For federal government employees, the rules depend on when you were hired:

• Hired before January 1, 1984: You’re likely covered by the Civil Service Retirement System (CSRS) and didn’t pay Social Security taxes on your federal earnings. Your Social Security benefits may be reduced by the WEP if you qualify for Social Security from other work. And if you receive spousal or survivor benefits, they may be reduced by the GPO.
• Hired after December 31, 1983: You’re covered by the Federal Employees Retirement System (FERS) and paid Social Security taxes on your federal earnings. Your Social Security benefits won’t be reduced because of your federal pension.

State and Local Government Employees

Rules for state and local government employees vary widely:

• Some state and local governments participate in Social Security, meaning employees pay Social Security taxes and won’t face WEP or GPO reductions.
• Other state and local governments don’t participate in Social Security. If you worked for one of these employers, your Social Security benefits might be reduced by the WEP or GPO.

Check with your employer or pension administrator to determine if your state or local government job was covered by Social Security.

Military Pensions and Social Security

If you receive a military pension, you can also collect full Social Security benefits. Military service has been covered by Social Security since 1957, so service members pay Social Security taxes on their earnings.

Special rules may apply to military service before 1957. You might receive special credit for that service when applying for Social Security benefits.

Teachers’ Pensions and Social Security

Teachers’ pension situations vary by state:

• Teachers in states where schools participate in Social Security (like New York): These teachers pay Social Security taxes and can receive both their full teacher’s pension and Social Security benefits.
• Teachers in states where schools don’t participate in Social Security (like California, Texas, and Illinois): Teachers in these states may see their Social Security benefits reduced by the WEP if they qualify for Social Security from other work. And if they receive spousal or survivor benefits, those may be reduced by the GPO.

The National Education Association offers resources to help teachers understand how their pensions interact with Social Security.

Railroad Retirement Benefits and Social Security

Railroad workers have their own retirement system—the Railroad Retirement Board (RRB)—which provides benefits similar to Social Security, but often at higher amounts.

If you qualify for both railroad retirement and Social Security benefits:

• Tier 1 railroad benefits (equivalent to Social Security) will be reduced by the amount of your Social Security benefit.
• Tier 2 railroad benefits (similar to a private pension) are not affected by Social Security.

The Railroad Retirement Board provides detailed information on how these benefits coordinate.

Strategies to Maximize Your Benefits

1. Understand Your Specific Situation

The first step is to know exactly how your benefits will interact:

• Contact the Social Security Administration to get a statement of your estimated benefits
• Ask your pension administrator how your pension is calculated and when you can begin receiving it
• Determine if the WEP or GPO will affect your benefits

2. Consider the Timing of Your Claims

Strategic timing can help maximize your lifetime benefits:

• If your pension provides sufficient income, consider delaying Social Security until age 70 to increase your benefit amount by up to 32% (compared to claiming at full retirement age)
• If you have health concerns or need immediate income, claiming both benefits earlier might make sense

3. Plan for Taxes

Work with a financial advisor or tax professional to develop strategies for minimizing taxes on your combined benefits:

• Consider whether traditional or Roth IRA withdrawals might help manage your tax bracket
• Look into qualified charitable distributions if you’re subject to required minimum distributions
• Explore whether it makes sense to pay taxes on some retirement funds before you begin collecting Social Security

4. Consider Spousal Benefits

If you’re married, coordinate your claiming strategy with your spouse:

• A lower-earning spouse might maximize their benefit by claiming spousal benefits
• If one spouse has a pension subject to GPO, the other spouse’s claiming strategy becomes particularly important

5. Stay Informed About Legislative Changes

Rules regarding Social Security and pensions can change. Several proposals have been introduced in Congress to modify or eliminate the WEP and GPO provisions. Stay informed about potential changes by following updates from:

• The Social Security Administration
• AARP
• Organizations representing government employees and retirees

Different Types of Pensions and Their Social Security Impacts

Traditional Defined Benefit Plans

Most traditional defined benefit plans from private employers don’t affect Social Security benefits. You’ll receive your full pension and full Social Security benefit.

Cash Balance Plans

These are a type of defined benefit plan that combines features of traditional pensions and 401(k)s. Like traditional pensions from private employers, cash balance plans typically don’t affect your Social Security benefits.

401(k)s, 403(b)s, and Other Defined Contribution Plans

Though not technically pensions, these retirement plans don’t affect your Social Security benefits. Income from these plans isn’t considered a “pension” for WEP or GPO purposes.

State and Local Government Pensions

The impact depends on whether the government employer participated in Social Security:

• If your employer participated and you paid Social Security taxes, there’s no reduction to your benefits.
• If your employer didn’t participate and you didn’t pay Social Security taxes, your benefits might be reduced by the WEP or GPO.

Common Questions About Social Security and Pensions

Can I receive my pension and Social Security at the same age?

Not necessarily. Pension eligibility ages vary by employer and plan, while Social Security benefits can begin as early as age 62. You’ll need to check your specific pension rules and compare them with Social Security’s age requirements.

Will my Social Security cost-of-living adjustments (COLAs) be affected by my pension?

No. If you’re eligible for Social Security COLAs, you’ll receive them regardless of any pension you collect. However, if the WEP or GPO reduces your initial benefit, your COLAs will be calculated based on that reduced amount.

Can I receive a pension, Social Security, and SSI (Supplemental Security Income)?

It’s possible but unlikely. SSI is a needs-based program for people with limited income and resources. Your pension and Social Security income will count toward SSI’s strict income limits, likely making you ineligible unless your combined benefits are very small.

What happens to my benefits if I continue working while receiving a pension and Social Security?

If you’re below full retirement age and earn above certain limits ($19,560 in 2023), your Social Security benefits will be temporarily reduced. Once you reach full retirement age, there’s no reduction in benefits regardless of how much you earn.

Your pension payments typically won’t be affected by continued work unless your pension plan has specific rules about returning to work for the same employer.

Can my pension or Social Security benefits be garnished?

• Social Security benefits have limited protection from creditors but can be garnished for certain types of debt, including federal taxes, child support, and alimony.
• Pension benefits may have different protections depending on state laws and the type of pension. ERISA-qualified private pensions have strong protections from most creditors.

What happens to my benefits if I move abroad?

• Social Security benefits can generally be received while living abroad, with a few country-specific exceptions.
• Pension payments usually continue regardless of where you live, but you should check with your pension administrator about any special requirements or tax implications.

The Future of Social Security and Pensions

The landscape of retirement benefits continues to evolve:

Social Security Challenges

The Social Security trust fund is projected to be depleted by the mid-2030s. While this doesn’t mean the program will end—ongoing payroll taxes will still fund about 80% of scheduled benefits—it may lead to changes in how benefits are calculated or taxed.

The Decline of Traditional Pensions

Traditional defined benefit pensions have become increasingly rare in the private sector. According to the Bureau of Labor Statistics, only about 15% of private-sector workers had access to defined benefit plans in 2020, down from 38% in 1980.

Potential Reforms

Several reforms have been proposed to address challenges in both systems:

• Changes to the WEP and GPO provisions that affect government pensioners
• Adjustments to Social Security’s full retirement age or benefit calculation formula
• New types of retirement savings vehicles to supplement traditional benefits

Resources for Planning Your Retirement

Government Resources

• Social Security Administration: Information on benefits, calculators, and online services
• Medicare.gov: Details on healthcare coverage for retirees
• Pension Benefit Guaranty Corporation: Protects private-sector pension benefits

Planning Tools

• Social Security’s Retirement Estimator: Calculates your potential benefits
• WEP and GPO Calculators: Estimate the impact of these provisions on your benefits
• Benefits Checkup: Helps seniors find benefit programs to pay for healthcare, medicine, food, and more

Professional Help

Consider consulting with:

• A financial advisor who specializes in retirement planning
• A tax professional who understands the tax implications of retirement benefits
• A benefits counselor at your local Area Agency on Aging

Key Takeaways

1. Yes, you can receive both Social Security and pension benefits at the same time in most cases.
2. Your benefits might be reduced if you receive a pension from work where you didn’t pay Social Security taxes, typically from certain government jobs.
3. Private sector pensions usually don’t affect your Social Security benefits.
4. Strategic timing of when you claim different benefits can significantly impact your lifetime income.
5. Tax planning is essential, as receiving multiple retirement income streams can increase your tax liability.

Understanding how these benefits work together will help you create a more secure retirement. By planning ahead and considering all your options, you can maximize your income and ensure financial stability throughout your retirement years.

Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.