Tips on tapping Social Security
When Social Security was enacted in 1935, state and local government employees were excluded from coverage. It was believed that the federal government should not have the authority to tax state and local governments. Today, Social Security is available to state and local government employees but many states, including New York, California and Texas, instead provide alternative plans. Contribution rates and employer matching rates vary. Washington University's Bernstein says that while state plans often provide better returns, public employees who withdraw contributions before retiring forfeit their employers' contribution and greatly reduce their benefit.