MA Pension Option A vs. Option C: How the GPO Repeal Offsets Survivor Costs
By Tim Hayes, Financial Advisor for the Public and Not-for-Profit Sector
The Decision on Option C Has Changed
Option C reduces your monthly pension by about 9-11% to provide your spouse with two-thirds of your pension for life. Previously, this reduction directly reduced your household income with no offset.
This has changed. You are now eligible for a spousal Social Security benefit of up to 50% of your spouse’s benefit while both of you are alive. For many Massachusetts public employees, this benefit offsets some or all of the Option C reduction, so survivor protection may cost your household less than your pension estimate indicates.
If your spouse predeceases you, your pension returns to the full Option A amount, and you receive 100% of their Social Security benefit for life.
What It Means for Massachusetts Public Employees
If you are a Massachusetts public employee married to, or formerly married to for at least 10 years, someone working in the private sector, the repeal of the Government Pension Offset (GPO) has affected your retirement income outlook in ways that are important to understand before you retire.
What the Government Pension Offset Was
The GPO was a federal rule that cut and, for most Massachusetts public employees, eliminated the Social Security spousal and survivor benefits they would otherwise be eligible for. Congress repealed it in December 2024.
What Changed — Two Facts Worth Understanding
While both of you are alive, you are now eligible for a spousal benefit of up to 50% of your spouse’s Social Security. Before the repeal, the GPO eliminated this for most affected public employees.
When your spouse predeceases you, you can receive up to 100% of their Social Security benefit for life. Before the repeal, the GPO also removed this benefit. Combined with your pension, this creates a significantly different retirement income picture than existed before December 2024.
Your own Social Security benefit: the WEP repeal fully restored any Social Security benefits you earned from private sector work. You receive whichever is higher — your own benefit or 50% of your spouse’s at full retirement age. For many Massachusetts public employees, the spousal benefit is larger because they do not have 35 years of Social Security earnings, or their earnings are from part-time work.
Timing — When to Take Social Security
Many Massachusetts public employees retire and start collecting their pension well before Social Security begins. The timing of when you and your spouse claim Social Security directly affects your household income, and the rules vary depending on whether you are claiming a spousal benefit or your own.
You cannot start receiving a spousal benefit until your spouse has filed for and is actively collecting their own Social Security. If your spouse delays to increase their own benefit, your spousal benefit won’t begin until they file. Coordinating when your spouse claims is a crucial part of the planning.
Spousal benefits do not increase after full retirement age. The maximum spousal benefit is 50% of your spouse’s benefit at full retirement age. Unlike your own Social Security, a spousal benefit does not grow if you delay past full retirement age. Claiming early reduces it — at 62, it is only 32.5%.
If You Were Previously Married
If your marriage lasted at least 10 years and you haven’t remarried, you qualify for Social Security spousal benefits while your ex-spouse is alive and survivor benefits after they pass away — without affecting their benefits. That income impacts your retirement planning.
Social Security as an addition changes the 403(b) and 457(b) conversation. With that addition in place, you may be able to contribute more aggressively to your 403(b) and 457(b) while you are still working—taking on more growth-oriented investments than you otherwise would. Or you might find you can retire earlier than planned.
Note: If you have remarried, you are no longer eligible for benefits based on your ex-spouse’s record.
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What to Consider Before Making Your Decision
- The difference in the dollar amount between your Option A and Option C pensions is what survivor protection costs you each month.
- Your spousal or survivor Social Security benefit — contact the Social Security Administration for your actual figure.
- If divorced after 10 or more years, your benefit on your ex-spouse’s record — this does not affect what they receive.
- The age difference between you and your spouse — the larger the gap, the greater the Option C reduction.
- Your respective health and life expectancy.
- Whether the Option C reduction is affordable while both of you are alive.
Option C Offset Modeling
I work with Massachusetts public employees, both married and formerly married, to model these decisions using your actual pension estimate, your Social Security benefit picture, and your household income needs. The GPO repeal has made this analysis more valuable and more urgent than it has been in years.
Book a Retirement Planning Consultation — $200/hr
We'll walk through your spousal benefit against your own record, talk through claiming timing relative to your pension, and identify the strategy that fits your household. From there, I'll let you know what additional analysis, if any, makes sense.
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Book a consultation ($200/hr) online, or call 508-277-5847 to schedule.
These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice. Content provided via links to third-party sites should not be considered an endorsement of content that we cannot verify completeness or accuracy of.