Is this Social Insecurity?

Gloria DeNecochea has a problem. She wants to return to teaching. But after an 18-year career in private industry, what the 53-year-old West Los Angeles resident doesn't want to do is mess up her retirement plan. A return to teaching could do just that.

Why? Many California school districts do not participate in the Social Security retirement system. As a result, teachers are subject to potentially onerous provisions in Social Security law.

One is called the "windfall elimination provision," the other, the "government pension offset." Either one can seriously undermine an individual's retirement plans. They are particularly costly to those who, like DeNecochea, spend many years in private industry and then switch to, or return to, teaching.

DeNecochea taught for three years after college, but quickly was lured into higher-paying jobs in private industry. She and her husband recently reduced their expenses so she could return to teaching, but she balked when she realized how much it might cost her in retirement benefits.

In DeNecochea's case, the Social Security benefits she could claim on her own work record would be cut to half of what they would be if she remained in the private sector.

To understand how the move would affect her - and others who might want to switch to teaching in mid-career - requires diving into the often-Byzantine Social Security rules.

There are two that would figure into this case:

• The "windfall elimination provision" kicks in the moment anyone becomes covered by a government pension from work that is not covered by Social Security, says Leslie Walker, a spokeswoman with the Social Security Administration in Northern California. (Roughly 25 percent of the state and local government offices nationwide do not participate in the Social Security system.)

It reduces the Social Security benefits you can claim based on your own work record by applying a less generous benefit formula to your average working wages. Teachers tend to complain about it more than other public employees, possibly because teaching is a more common midlife career than, say, firefighting or police work.

Consider two hypothetical workers, who each had average monthly wages of $4,000 during 20-year careers in private industry. One decided to retire, and the other went on to teach in public schools for five years, earning a small government pension.

At 65, the one who worked 20 years and retired would get $1,039.42 per month from Social Security. The one who worked five more years - as a teacher - would get $265.52 less, or $773.90 per month, because of the windfall formula.

• The other factor in DeNecochea's case involves the basic Social Security formula, which calculates benefits based on 35 years of wage data.

If DeNecochea stays in private industry she can accumulate 12 more years of work under the Social Security system before she turns 65. Because she already has 18 years in credits, that would give her 30 years of work for the Social Security calculation. (Her early teaching years are not covered by Social Security.)

The benefits calculation requires 35 years, so there would be five "zero-earnings years" included. Assuming an average monthly wage of $4,000, those five zeros would reduce her average wage for the Social Security formula to $3,428.57 ($4,000 times 30 divided by 35). That would allow her to claim roughly $1,366.30 each month in Social Security benefits.

However, if she were to return to teaching instead of remaining in private industry, she would have 17 zero-earnings years for Social Security purposes. That would reduce her average monthly wage to $2,057.14.

Naturally, the effect on her benefits is dramatic. Instead of taking home $16,395 annually in Social Security, she would get just $8,409, or $700.76 per month.

Of course, her teacher's pension could replace her lost retirement benefits - but she points out that workers in private industry generally earn a pension without reducing their Social Security benefits.

The government says it imposes the windfall formula because the Social Security system is designed to replace a higher percentage of working wages for those who earn the least. The theory is that the less you earn when working, the less able you are to save for retirement. As a result, Social Security replaces roughly 60 percent of the earnings of a typical lower-wage earner but just 25 percent of the earnings of a typical higher-wage earner.

If the agency applied the same formula to calculate benefits for a teacher, those "zero years" in the calculation would make the teacher appear to be poorer than he or she really is. Thus, they'd be unjustly enriched if there were no windfall formula, according to the Social Security Administration.

Teachers say this theory is specious because the same could be said about parents who opt to stay home for several years to raise children. The Social Security earnings calculation will add "zero years" for them, too, which may make them look like low wage earners. No one asks whether they truly were low-income, or whether their spouses earned so much that they didn't have to work. Naturally, stay-at-home spouses aren't subject to the windfall formula.

Moreover, teachers are subject to another Social Security rule that can make it impossible for them to claim benefits on a spouse's or former spouse's work record. This provision, called the government pension offset, reduces spousal benefits by $1 for every $1 you receive from a government pension. For many teachers and other government workers, this eliminates their ability to claim spousal benefits.

This combination of retirement rules strikes many teachers as being unfairly punitive. For DeNecochea - who longs to resume the challenge of teaching "at-risk," often gang-involved kids in public schools - it's a career breaker.

"We need to find a way to pass legislation to encourage more private-sector employees to start teaching," she says. "We have such a deficit of teachers right now. I would hope that our government would want to do something about this inequity."