Jobs without social security?

[GoodMonikersAllTaken]

I'm job searching and trying to understand retirement options. I'm looking at state jobs but I'm nervous about not paying into social security and confused about the implications.

I understand that state retirement plans are supposed to take the place of social security in that case, but how does this work if you aren't a lifer in those jobs? What if you leave before the vesting period?

Do any of you have experience with this? How have you seen this work or not work for people? I'm extra nervous because every time I've worked for government, I've been in some newer category that wasn't as good as whatever the old plan was. I'm also nervous because I've got a bit of the job hopper tendency in me. I'm thinking I'm not wired to benefit from government job benefits.

[Sibley]

Historically, government employees were lifers. The pensions are designed for it. So if you want to jump around, then yeah, there will be consequences.

Couple things you need to be aware of regarding pensions. First, the eligibility and contribution requirements. Second, the funding status.

All this information will be available online. You can google to find the plan's website, or if that isn't working you can go find the financial statements for your local government entity. Why? Because accounting standards require that government entities that have pensions include a whole bunch of info about the plan in its financials.

So, examples here. You're in Illinois and you google (or know) and find IMRF, which is the state wide municipal retirement plan. https://www.imrf.org/

Or, you know that you are looking at getting at job in the City of Chicago. So you google "city of chicago ACFR" or "city of chicago financial statements", then get in the financials and search for pension. Eventually you'll find the name of it. (Chicago isn't part of IMRF, they have their own plan.)

Chicago's 2022 ACFR:https://www.chicago.gov/content/dam/city/depts/fin/supp_info/CAFR/2022CAFR/ACFR_2022.pdf    the pension footnote starts on pdf page 92.

OPEB = other post employment benefits = health insurance for retirees.

Benefits, eligibility, vesting, etc matter for obvious reasons. Funding status matters because if the plan is largely unfunded, then there's a higher chance that it's going to ultimately fail, or benefits will be cut, or something. This is a real concern. A lot of places made grand promises when times were good and then started to run into problems when times were bad. The stock market going up has helped some.

[StarBright]

This is something that my family has bumped up against because my husband has a state job that doesn't pay into SS.

We mitigate by me also not taking a state job. A bit of a bummer for me because being a civil servant is actually where my interests lie. But at least we'll have my social security, and DH can claim spouse benefits down the road.

For your situation, at least in Ohio, I believe hopping jobs within the pension system still counts toward vesting. So maybe double check that?

[Catbert]

If you think you might stay with a state/local government job long enough to earn a pension become familiar with SS's Windfall Elimination Provision (WIP) and Government Pension Offset.  These provisions impact your ability to collect both a pension earned not paying into SS and SS based on other jobs in which you did pay into SS.

If your concern is more about having fewer years in SS bc of your time with state government read about how SS benefits are computed and bend points:

https://rootofgood.com/early-retirement-social-security/

[Rural]

Depends on the state (or sometimes the job) as well. I'm in a state job with a pension and also pay into Social Security, so I'll also get that without the windfall elimination.

[GoodMonikersAllTaken]

Thank you so much, everyone. These are exactly the type of insights and suggestions I'm looking for.

I'm reading about the WEP and GPO now. A bit confusing but I want to understand this thoroughly before I make a change.

[Silrossi46]

Depends on the state (or sometimes the job) as well. I'm in a state job with a pension and also pay into Social Security, so I'll also get that without the windfall elimination.

This is similar for me full pension and full SS.  I pay into SS. Local county government job.  It is available but most new employees entering most systems now will have to work a lot longer and get less.

[clarkfan1979]

I'm job searching and trying to understand retirement options. I'm looking at state jobs but I'm nervous about not paying into social security and confused about the implications.

I understand that state retirement plans are supposed to take the place of social security in that case, but how does this work if you aren't a lifer in those jobs? What if you leave before the vesting period?

Do any of you have experience with this? How have you seen this work or not work for people? I'm extra nervous because every time I've worked for government, I've been in some newer category that wasn't as good as whatever the old plan was. I'm also nervous because I've got a bit of the job hopper tendency in me. I'm thinking I'm not wired to benefit from government job benefits.

I am a community college professor and I do not pay into SS. I consider it to be a benefit because I think I am going to be more efficient with my money than the government. I contribute 14% and my employer contributes 13.5% into a 401a. I'm 100% equities (S & P 500). Fees are small.

[Cassie]

This is something that my family has bumped up against because my husband has a state job that doesn't pay into SS.

We mitigate by me also not taking a state job. A bit of a bummer for me because being a civil servant is actually where my interests lie. But at least we'll have my social security, and DH can claim spouse benefits down the road.

For your situation, at least in Ohio, I believe hopping jobs within the pension system still counts toward vesting. So maybe double check that?

Starbright, read up on both WEP and GPO. Your husband will not be able to claim SS spousal benefits under your SS. If he has 40 quarters of his own he can claim his own SS which will be substantially reduced by WEP depending on how many years of what SS considers substantial earnings that he has. SS has a calculator to estimate his SS based on his actual earnings for this situation.

It’s complicated but I am very knowledgeable about it because both my husband and I retired from a state that didn’t pay into SS and both of us started working there in our 40’s not fully understanding the impact although we both ended up better off. But that’s not the case for everyone.

[StarBright]

This is something that my family has bumped up against because my husband has a state job that doesn't pay into SS.

We mitigate by me also not taking a state job. A bit of a bummer for me because being a civil servant is actually where my interests lie. But at least we'll have my social security, and DH can claim spouse benefits down the road.

For your situation, at least in Ohio, I believe hopping jobs within the pension system still counts toward vesting. So maybe double check that?

Starbright, read up on both WEP and GPO. Your husband will not be able to claim SS spousal benefits under your SS. If he has 40 quarters of his own he can claim his own SS which will be substantially reduced by WEP depending on how many years of what SS considers substantial earnings that he has. SS has a calculator to estimate his SS based on his actual earnings for this situation.

It’s complicated but I am very knowledgeable about it because both my husband and I retired from a state that didn’t pay into SS and both of us started working there in our 40’s not fully understanding the impact although we both ended up better off. But that’s not the case for everyone.

Oh interesting! The HR person at his job said he would be able to claim spouse SS but that it would still be affected by WEP.

I think it is bogus that a 401a counts as a pension, especially since his employer contributes significantly less to it then they contribute to pensions. But there you go!

He probably will also end up with 40 qtrs because he has only been at this job for 6 years, and he still pays SS on his side hustle and he paid in on his previous jobs. But he never made much at those, so his HR consultant indicated he would probably be better off filing as a spouse someday.

I will definitely double check this now though!

[By the River]

Its definitely complicated.  If you have more than 30 years of SS earnings, then you will not be affected by the WEP/GPO.  Between 20 and 30 years of SS earnings, the WEP reduction is reduced by 5% for each year above 20. 

[farmecologist]

I'm job searching and trying to understand retirement options. I'm looking at state jobs but I'm nervous about not paying into social security and confused about the implications.

I understand that state retirement plans are supposed to take the place of social security in that case, but how does this work if you aren't a lifer in those jobs? What if you leave before the vesting period?

Do any of you have experience with this? How have you seen this work or not work for people? I'm extra nervous because every time I've worked for government, I've been in some newer category that wasn't as good as whatever the old plan was. I'm also nervous because I've got a bit of the job hopper tendency in me. I'm thinking I'm not wired to benefit from government job benefits.

I am a community college professor and I do not pay into SS. I consider it to be a benefit because I think I am going to be more efficient with my money than the government. I contribute 14% and my employer contributes 13.5% into a 401a. I'm 100% equities (S & P 500). Fees are small.

Yikes...Frankly, I'd want SS as a backup. 

We have a 401k+employer match, a 403b+Pension, and SS for both of us.   SS-as-a-backup allows me to feel much more comfortable about having our 401k and 403b is somewhat more risky investments.

Not sure I would sleep well at night having my entire retirement portfolio in 100% equities...

And no...SS is NOT going away, folks... In fact there is likely a better chance of state pension programs going away than SS going away.  But neither are likely to happen.

[Cassie]

Its definitely complicated.  If you have more than 30 years of SS earnings, then you will not be affected by the WEP/GPO.  Between 20 and 30 years of SS earnings, the WEP reduction is reduced by 5% for each year above 20.

It’s not just the number of years but the number of years you had what SS considers substantial earnings. So for example in 1970 you earned 7k and 10k is substantial earnings for that year so it doesn’t count. This happened to me. Do you mean your husband doesn’t have a pension but 401k?

[StarBright]

Its definitely complicated.  If you have more than 30 years of SS earnings, then you will not be affected by the WEP/GPO.  Between 20 and 30 years of SS earnings, the WEP reduction is reduced by 5% for each year above 20.

It’s not just the number of years but the number of years you had what SS considers substantial earnings. So for example in 1970 you earned 7k and 10k is substantial earnings for that year so it doesn’t count. This happened to me. Do you mean your husband doesn’t have a pension but 401k?

He has a 401a - which is basically like a 401k but has a defined contribution, but it counts as a pension for social security purposes. He does not pay into SS because in our state, state employees do not pay into social security.

But he isn't in the state pension plan because his job started as a temp job.