%0 Journal Article %J Social Security Bulletin %D 2014 %T The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study %A Alan L Gustman %A Thomas L. Steinmeier %A N. Tabatabai %K Employment and Labor Force %K Income %K Pensions %K Public Policy %K Retirement Planning and Satisfaction %K Social Security %X This article uses Health and Retirement Study data to investigate the effects of Social Security's Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) on Social Security benefits received by households. The provisions reduce benefits for individuals or the dependents of individuals whose work histories include jobs for which they were entitled to a pension and were not subject to Social Security payroll taxes ( noncovered employment). We find that about 3.5 percent of households are subject to either the WEP or the GPO, and that the provisions reduce the present value of their Social Security benefits by roughly one-fifth. Households affected by both provisions experience benefit reductions of about one-third. Under the WEP, the Social Security benefit reduction is capped at one-half of the amount of the pension from noncovered employment, which substantially reduces the WEP penalty and prevents the WEP adjustment from falling disproportionately on households in the lowest earnings category. %B Social Security Bulletin %I 74 %V 74 %P 55-69 %G eng %N 3 %4 Retirement Policies/Wage Level and Structure/Wage Differentials/Public Sector Labor Markets/labor Force Participation/Earnings/Pensions/Public Employee/Social Security/Windfall Elimination Provision/Government Pension Offset %$ 999999 %0 Report %D 2013 %T The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study %A Alan L Gustman %A Thomas L. Steinmeier %A N. Tabatabai %K Public Policy %K Retirement Planning and Satisfaction %K Social Security %X This paper uses data from the Health and Retirement Study to investigate the effects of Social Security s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) provision on Social Security benefits received by individuals and households. WEP reduces the benefits of individuals who worked in jobs covered by Social Security and also worked in uncovered jobs where a pension was earned. WEP also reduces spouse benefits. GPO reduces spouse and survivor benefits for persons who worked in uncovered government employment where they also earned a pension. Unlike previous studies, we take explicit account of pensions earned on jobs not covered by Social Security, a key determinant of the size of WEP and GPO adjustments. Also unlike previous studies, we focus on the household. This allows us to incorporate the full effects of WEP and GPO on spouse and survivor benefits, and to evaluate the effects of WEP and GPO on the assets accumulated by affected families. Among our specific findings: About 3.5 percent of households are subject to either WEP or to GPO. The present value of their Social Security benefits is reduced by roughly one fifth. This amounts to five to six percent of the total wealth they accumulate before retirement. Households affected by both WEP and GPO lose about one third of their benefit. Limiting the Social Security benefit to half the size of the pension from uncovered employment reduces the penalty from WEP for members of the original HRS cohort by about 60 percent. %I Ann Arbor, The University of Michigan %G eng %U http://www.mrrc.isr.umich.edu/publications/papers/pdf/wp288.pdf %4 public Pensions/retirement planning/social Security/Public Policy/government pension offset/windfall elimination provision %$ 69116 %0 Journal Article %J Social Security Bulletin %D 2009 %T Social Security Research at the Michigan Retirement Research Center %A R.V. Burkhauser %A Alan L Gustman %A John Laitner %A Olivia S. Mitchell %A Amanda Sonnega %K Meta-analyses %K Older Adults %K Research %K Social Security %X Social Security has been a topic of widespread discussion in the last decade. Rising longevity and falling fertility have led to an aging population, which increases solvency challenges for the Social Security system. Public concerns over low national saving have led to an extensive dialog on the merits of reform that might change the U.S. system into one with fully or partially funded personal accounts. Meanwhile, pensions in the private sector have been evolving from predominantly defined benefit (DB) to predominantly defined contribution (DC), raising concerns that workers preparing for retirement have more personal responsibility, with more complex financial challenges, than ever before. %B Social Security Bulletin %V 69 %P 51-64 %G eng %U https://www.ssa.gov/policy/docs/ssb/v69n4/v69n4p51.pdf %N 4 %& 51 %0 Journal Article %J Social Security Bulletin %D 2009 %T Social Security Research at the Michigan Retirement Research Center %A R.V. Burkhauser %A Alan L Gustman %A John Laitner %A Olivia S. Mitchell %A Amanda Sonnega %K Pension %K Retirement %K Social Security %X Social Security has been a topic of widespread discussion in the last decade. Rising longevity and falling fertility have led to an aging population, which increases solvency challenges for the Social Security system. Public concerns over low national saving have led to an extensive dialog on the merits of reform that might change the U.S. system into one with fully or partially funded personal accounts. Meanwhile, pensions in the private sector have been evolving from predominantly defined benefit (DB) to predominantly defined contribution (DC), raising concerns that workers preparing for retirement have more personal responsibility, with more complex financial challenges, than ever before. %B Social Security Bulletin %V 69 %G eng %U https://www.ssa.gov/policy/docs/ssb/v69n4/v69n4p51.html %N 4 %9 Journal %0 Report %D 2005 %T Social Security and Retirement Dynamics %A Alan L Gustman %A Thomas L. Steinmeier %K Consumption and Savings %K Social Security %X This paper is based on a structural model of retirement and saving, estimated with data for a sample of married men in the Health and Retirement Study. It explains the relation of specific features of Social Security -- the benefit amount, the early entitlement age, the normal retirement age, earnings test parameters, and the delayed retirement credit -- to the full range of retirement outcomes -- continued work on the main job, full time work outside the main job after a period of partial or full retirement, as well as partial retirement and full retirement. The project also estimates the relation of Social Security to the flows among these states. We consider not only the effect of Social Security on movement from states of greater to lesser work, the probability of either moving from full time work to partial retirement or directly to full retirement, or from partial retirement to full retirement, but the reverse flows from states of lesser work to states of greater work. The largest effects of the policies examined are from increasing the early entitlement age from 62 to 64 and reducing benefits to 75 percent of their promised levels, the approximate amount benefits would have to be reduced when the trust fund runs out if there are no changes in funding. With the older early entitlement age, about 5 percent more of the population continues to work full time at their main job at 62 and 63 than would otherwise. In addition, another 4.5 percent of the male population works full time after having retired, as does another 4 percent at age 63. Partial retirement is reduced at ages 62 and 63 by about 3 percentage points when the early entitlement age is 64. Overall, complete retirements are about 6 percentage points lower at 62 and 63 when the early retirement age is higher. From age 64 on, the percent completely retired is about two percentage points lower in each year when the early entitlement age is 64 rather than 62. The effects of reducing promised Social Security benefits by about a quarter are also large. The probability of remaining on the main job is higher for those in their sixties, with the difference ranging from 3 to 5 percentage points for those ages 62 and older. At each year of age, an additional 1 percentage point will be in full time work after having retired. There is little difference in the fraction partially retired, so the probability of being fully retired is reduced by 4 to 6 percentage points when benefits are reduced by a quarter. %B Michigan Retirement Research Center Research Project %I The University of Michigan, Michigan Retirement Research Center %C Ann Arbor, MI %G eng %U https://mrdrc.isr.umich.edu/projects/social-security-and-retirement-dynamics/ %4 Retirement Saving/Social Security %$ 16720 %0 Journal Article %J Journal of Public Economics %D 2005 %T The Social Security Early Entitlement Age In A Structural Model of Retirement and Wealth %A Alan L Gustman %A Thomas L. Steinmeier %K Methodology %K Net Worth and Assets %X A structural life cycle model of retirement and wealth attributes retirement peaks at both ages 62 and 65 to Social Security rules and wide heterogeneity in time preferences. Those with high discount rates often retire at 62. They have few assets and heavily value lost benefits from working after 62, largely ignoring potential increases in later benefits. Declining actuarial adjustments beginning at 65 induce those with low discount rates to retire at 65. Raising the Social Security early entitlement age to 64 induces 5 of the population to delay retiring, shifting the retirement spike from 62 to 64. %B Journal of Public Economics %I 89 %V 89 %P 441-463 %G eng %N 2-3 %L pubs_2005_SocSecEarlyEnt.pdf %4 Social Security Research/Retirement Wealth %$ 6632 %R https://doi.org/10.1016/j.jpubeco.2004.03.007 %0 Journal Article %J Journal of Applied Econometrics %D 2004 %T Social Security, Pensions and Retirement Behaviour Within the Family %A Alan L Gustman %A Thomas L. Steinmeier %K Adult children %K Pensions %K Retirement Planning and Satisfaction %K Social Security %X This paper estimates a structural model of family retirement using US data from the Health and Retirement Study (HRS). It provides further insight into household retirement decision making and the reasons for interdependence in the retirement decisions of each spouse. Improvements in HRS data and matched employer provided pension histories allow more precise identification of key parameters governing interdependent behaviour within the household. In an earlier study we found that interdependence was due to preferences rather than coordination of retirement incentives in the budget, and in particular that it is not a correlation in preferences, but the appearance of the spouse's retirement status in the husband's and wife's utility function that is largely responsible for coordination of retirement between spouses. We now find that a measure of how much each spouse values being able to spend time in retirement with the other accounts for a good portion of that apparent interdependence. For the wife, the husband's retirement status influences her retirement decision only if she values spending time in retirement with her husband. For husbands, the effect of having the wife already retired on his retirement decision is roughly doubled if he enjoys spending time in retirement with his wife, but there is some effect even if he does not. This is consistent with our earlier findings that the husband is more influenced by having a retired spouse than the wife is. The increase in the extent of the dependence of the wife's labour supply on the husband's retirement from our past work probably is traceable to better measurement of the opportunity set facing the husband in HRS data. Once estimated, we use the model to investigate the labour supply effects of alternative social security policies, examining the effect of dividing credit for earnings evenly between spouses, or of basing social security benefits on the amounts accumulated in private accounts. Both policies change the relative importance of spouse and survivor social security benefits within the household and both raise the relative reward to work later in the life cycle. The incentives created are modest, and retirement responds accordingly. Nevertheless, at some ages, such as 65, there may be as much as a 6 increase in the old age work force under privatized accounts. Copyright 2004 John Wiley and Sons, Ltd. %B Journal of Applied Econometrics %I 19 %V 19 %P 723-737 %G eng %N 6 %L pubs_2004_Gustman-Steinmeier_JAE.pdf %4 Retirement Behavior/Social Security/Pensions/Family %$ 6633 %R https://doi.org/10.1002/jae.753 %0 Book Section %B Issues in the Economics of Immigration %D 2000 %T Social Security Benefits of Immigrants and U.S. Born %A Alan L Gustman %A Thomas L. Steinmeier %E Borjas, George %K Consumption and Savings %K Demographics %K Employment and Labor Force %K Pensions %K Public Policy %K Retirement Planning and Satisfaction %K Social Security %X Immigrants realize higher Social Security benefits per year worked in the U.S. then U.S. born, even when earnings are identical in all years the immigrant has been in the U.S. The benefit formula favors those with low lifetime covered earnings, and the years prior to immigration are treated as years of zero earnings. If instead earnings were averaged only over years of residence in the U.S., and benefits were prorated based on the share of a 35 or 40 year base period spent in residence, immigrants would receive the same return on their social security taxes as U.S. born. For a sample from the Health and Retirement Study, a group born between 1931 and 1941, prorating reduces immigrants' social security benefits by 7 to 15 percent. For immigrants who entered in the 1980's, the reductions would be over 30 percent. Prorating would reduce the present value of benefit payments to immigrants born from 1932 to 1941 by 7.5 billion to 15 billion. Most immigrants will still pay slightly more in taxes than they will receive in benefits. Taxes received from immigrants who subsequently emigrate without collecting benefits tip the balance in favor of including immigrants. %B Issues in the Economics of Immigration %I University of Chicago Press %P 309-350 %G eng %4 Migration--International/Social Security and Public Pensions/Economics of the Elderly/Retirement/Retirement Policies/Immigrants/Social Security/Benefit Formulas/Taxes %$ 8218 %+ NBER Working Paper 6478. Copies available from: National Bureau of Economic Research, 1050Mass achusetts Avenue, Cambridge, MA 02138. %R 10.3386/w6478