Can I Collect Both Social Security and My Pension?

For millions of Americans, a combination of pension and Social Security benefits is the cornerstone of their retirement plan. However, until recently, certain provisions complicated this, potentially reducing benefits for those with specific work histories. A new law has simplified matters, allowing more retirees to collect both Social Security and their pension without penalty.

Quick Summary

Yes, you can collect both Social Security and your pension at the same time, though the amount and how you collect them can vary based on your specific situation. The recent repeal of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) has a significant impact, especially for public sector retirees. Careful planning is key to maximizing your retirement income from both sources.

Key Points

• SSFA Repeal: The Social Security Fairness Act of 2023 repealed WEP and GPO for benefits starting January 2024.

• Private Pensions Unaffected: Private pensions from FICA-covered jobs do not affect Social Security benefits.

• Public Pensions and Social Security: Public sector retirees previously affected by WEP or GPO can now receive full Social Security benefits.

• Retroactive Payments: Retroactive payments may be available for benefits reduced in 2024.

• Timing Matters: Delaying Social Security up to age 70 can increase benefits, unlike most pensions.

• Check Your Records: Review your 'my Social Security' account for earnings history and estimates.

Understanding the Social Security Fairness Act

As of January 2025, the Social Security Fairness Act (SSFA) of 2023 repealed the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), removing previous barriers for individuals receiving pensions from work not covered by Social Security. These changes apply to benefits payable starting in January 2024.

What the Repeal Means for Retirees

The repeal is beneficial for many, particularly public sector workers like teachers, police officers, and firefighters, who previously had their Social Security benefits reduced. They can now receive their full Social Security benefit alongside their non-covered pension, potentially increasing their monthly income. Retroactive payments may be available for those whose benefits were reduced during 2024.

Private vs. Public Sector Pensions

Distinguishing between private and public sector pensions is important for understanding their impact on Social Security benefits.

Private Sector Pensions and Social Security

For most retirees with private-sector pensions, collecting both a pension and Social Security has not been an issue. If your employer withheld FICA taxes, your pension does not affect your Social Security benefit.

Public Sector and Foreign Pensions

Before the SSFA repeal, pensions from non-covered government or overseas employment could lead to reduced Social Security benefits through WEP and GPO. This is no longer a concern for benefits payable starting January 2024.

When a Pension Was Previously Reduced

Before the recent law change, WEP reduced Social Security benefits for workers with fewer than 30 years of substantial Social Security-covered earnings who also received a non-covered pension. GPO reduced spousal or survivor Social Security benefits for those receiving a non-covered pension.

Understanding Your Work History

Knowing your work history is still important, especially for potential retroactive payments for benefits in 2024. The Social Security Administration provides information on how these changes affect beneficiaries.

Timing Your Benefits: Pension vs. Social Security

The timing of claiming benefits impacts overall retirement income. Social Security benefits can increase each year you delay claiming past full retirement age, up to age 70, unlike most pensions which typically do not have cost-of-living adjustments (COLAs).

Comparison of Benefit Options

Aspect	Social Security	Pension
Benefit Increases	Monthly benefit increases for each year you delay claiming past full retirement age, up to age 70.	Generally fixed, without cost-of-living adjustments (COLAs).
Early Collection	Benefits can start as early as age 62 but will be permanently reduced.	Dependent on the specific pension plan rules; may be reduced if taken early.
Benefit Calculation	Based on your highest 35 years of indexed earnings.	Based on the pension plan's formula, which may consider years of service and salary.
Impact of Work	Can work and receive benefits at full retirement age without penalty; benefits may be temporarily reduced if working before full retirement age.	Does not count as earned income for Social Security purposes.

What to Do Now

Strategic planning is crucial even with the WEP and GPO repeal. To maximize financial security:

1. Check Your Records: Review your my Social Security account for your earnings history and benefit estimates.
2. Contact the SSA: If you were affected by WEP or GPO, contact the Social Security Administration for updates and information on retroactive payments.
3. Coordinate Benefits: Consider delaying Social Security if possible to take advantage of benefit increases, potentially living on your pension and savings in the meantime.
4. Consider Other Income Sources: Supplement Social Security and your pension with other retirement savings like an IRA or 401(k).
5. Review Spousal/Survivor Benefits: Confirm that GPO is not impacting spousal or survivor benefits for months starting in January 2024.

Conclusion

The repeal of WEP and GPO simplifies collecting both Social Security and a pension, especially for those with public service careers. While the answer is now generally yes, understanding how these changes apply to your specific situation is key to maximizing your retirement income. The Social Security Administration website is a valuable resource for accurate information, and consulting a financial advisor can provide personalized guidance. Proper planning ensures a secure retirement, allowing you to receive the benefits you have earned.

Frequently Asked Questions

Did the WEP and GPO officially end?

Yes, the Social Security Fairness Act of 2023 repealed both the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) for benefits payable for months beginning in January 2024 and later.

Will my Social Security be reduced if I receive a private pension?

No, if your employer paid FICA taxes, your private pension will not affect your Social Security benefit. Most private sector workers can collect both without reduction.

I am a retired teacher with a state pension. How does the new law affect me?

If you have a state pension not covered by Social Security, the repeal of WEP and GPO means your Social Security benefits will no longer be reduced for benefits payable from January 2024 onward.

Will I get back the money that was taken out of my Social Security before the law changed?

The repeal is effective for benefits starting in January 2024. If your benefits were reduced during 2024, you may be eligible for retroactive payments. The Social Security Administration has specific guidance on this.

Is it better to take my pension or Social Security first?

Since Social Security benefits increase significantly for delaying past full retirement age (up to 70), it's often better to delay Social Security. As most pensions don't have COLAs, claiming your pension while your Social Security grows can maximize total income.

Does this law apply to foreign pensions?

Yes, the repeal of WEP and GPO applies to non-covered pensions, which can include pensions from certain foreign employment, removing benefit reductions for those whose work was covered by a foreign social security system, provided other eligibility is met.

What if I worked in both covered and non-covered jobs?

Before the repeal, WEP could apply if you had fewer than 30 years of substantial earnings in covered employment. Now, this will not cause a reduction in your Social Security benefit; it will be calculated using the standard formula.