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Old 11-26-2012, 01:04 PM   #21
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If you have a very short SS record and hence a low SS payment WEP can take a big part of it, but never more than 50%.....max WEP is $385 or 50%.

Many people get annoyed at WEP, but I look at it like this. I have a nice state pension coming so I'm luckier than most. Also all WEP does is factor in your other pensions so you don't get the higher SS amounts that the truly low waged get.
Thanks for this, and the earlier post.

I did look it up and my pensions from my 2 previous UK employers plus my UK SS will ensure that I get the full WEP deduction since I only have 23 years of SS payments.

However, I'd much rather have those pensions than not.
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Old 11-26-2012, 01:24 PM   #22
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I'm expecting maybe $200 or so at 62 after WEP. I'm a federal employee about retire under CSRS. I have my 40 quarters, earned back in the mid-late 70's to early 80's.


Do you REALLY expect $200 or so, from 10 years of SS time, after WEP? Did you run their WEP calculator?
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Old 11-26-2012, 02:39 PM   #23
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Do you REALLY expect $200 or so, from 10 years of SS time, after WEP? Did you run their WEP calculator?
Yes, I did run the calculator. Actually, I think the number was closer to $250. Now....there may be something I missed, but that's what I came up with. My work years under SS were from 1973 thru 1983. SS verified that I would receive SOMETHING...and I crunched the numbers. I suppose maybe I should re-do it & see if I missed anything. Do you think that sounds high? SS verified I do have 40 qtrs.

If I don't get that $200, I might not be able to retire.....lol, just kidding!
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Old 11-26-2012, 02:48 PM   #24
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Social Security Retirement Benefits

SOCIAL SECURITY RETIREMENT BENEFITS
The earliest you may receive a Social Security retirement benefit is age 62. A retirement benefit is permanently reduced if it is received prior to the “full” Social Security retirement age. The “full” retirement age is the age at which unreduced Social Security retirement benefits are first payable. For individuals born before 1938, the full retirement age is 65. For individuals born in 1938 or later, the full retirement age ranges from age 65 and 2 months to age 67, depending upon the year of birth. You must first provide your Social Security earnings history in the EBIS My Profile Tool before estimated monthly Social Security retirement benefits (or the Monthly CSRS/FSRDS Offset Amount, if applicable) can be computed.
(Click here to enter your Social Security covered earnings into the EBIS Profile Tool.)



Voluntary/Optional Federal Retirement Age (Yrs/Mos)Monthly Social Security Retirement BenefitMonthly Social Security Retirement Benefits at Full Retirement Age
66/8 (Yrs/Mos)Monthly CSRS/FSRDS Offset Amount62/1$230.00$319.00N/A



I went into EBIS & pulled this up. This is based on the SS contribution info I input myself, taken from my SS statements. I'm hoping it works out this way.
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Old 11-26-2012, 02:52 PM   #25
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Ok, I couldn't get it to paste correctly, but what it says is that at age 62 my SS would be $230, and at age 66 it would be $319, based on the data I input when I did the calculator.
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Old 11-26-2012, 03:10 PM   #26
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Quote:
Originally Posted by martyb
Ok, I couldn't get it to paste correctly, but what it says is that at age 62 my SS would be $230, and at age 66 it would be $319, based on the data I input when I did the calculator.
I imagine you stand a good chance of being correct. I worked mostly part time type, and summer time minimum wage jobs from 1979 to 1991, then a couple more years of PT work tacked on in ER, 20 years later. Mine is $125 at 62 after WEP. WEP took what appears to have taken the maximum cut from mine.
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Old 11-26-2012, 03:33 PM   #27
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Ok, I couldn't get it to paste correctly, but what it says is that at age 62 my SS would be $230, and at age 66 it would be $319, based on the data I input when I did the calculator.
sounds reasonable to me: My DH worked 11 low paying years under social security, CSRS pension, his Social is $300 per mo. at 62( maximum reduction of about 1/2)
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Old 11-26-2012, 03:39 PM   #28
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Retirement Planner: How the Windfall Elimination Provision Can Affect Your Social Security Benefit

Quote:
I did look it up and my pensions from my 2 previous UK employers plus my UK SS will ensure that I get the full WEP deduction since I only have 23 years of SS payments.
according to the chart you will not be hit with maximum WEP. If you put 23 years in under SS maximum WEP is 268.50
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Old 11-26-2012, 03:40 PM   #29
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sounds reasonable to me: My DH worked 11 low paying years under social security, CSRS pension, his Social is $300 per mo. at 62( maximum reduction of about 1/2)
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I think "low paying" is a relative thing. DW, who receives a gov't pension, got her 40 qtrs under SS with really low paying years. Think part time jobs in high school and college and, later in life, an adjunct faculty job at a local university where she taught 1 course per semester. Her WEP adjusted SS........ roughly $100/mo. Not even enough to pay for her Medicare Part B.
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Old 11-26-2012, 03:47 PM   #30
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Retirement Planner: How the Windfall Elimination Provision Can Affect Your Social Security Benefit



according to the chart you will not be hit with maximum WEP. If you put 23 years in under SS maximum WEP is 268.50
They have to be "years of substantial earnings," not just years under SS. For folks with little SS income in a year (but enough to "qualify" for credit), such as teachers working for a few weeks in the summer at a low paying job, etc., they may accumulate 40 qtrs without having any "years of substantial earnings."

For a system invented to simply help out elderly folks who were impoverished in their old age, it's amazing how complicated it's gotten. It does seem like the amount of SS money headed towards folks who are either not impoverished in their old age or not even in old age or both is far beyond what the creators envisioned.

And so be it........
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Minimizing the effect of WEP on Social Security
Old 11-26-2012, 03:54 PM   #31
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Minimizing the effect of WEP on Social Security

I personally will have a small pension from five years of non-Social Security employment with the Los Angeles County Employee Retirement Association (LACERA), beginning next year, and was wondering when to start taking it. I downloaded the AnyPIA software program from Social Security to figure out the effect of taking the pension next year when I first become eligible (age 55) or at age 70.

By reading other articles about Social Security, I eventually realized that my pension from LACERA, like many pensions, is *not* indexed before retirement on a continuing basis for inflation as Social Security is. It will only start to receive a cost of living increase (a COLA) a year and a half *after* I start collecting the benefits, and even then, it will be capped at 2% a year. Social Security is thus the more valuable "pension" or annuity for me because it does increase with inflation to some extent, unlike LACERA, and after the full retirement age, the delayed retirement credits will increase the Social Security benefits significantly (to about 1.266 of the PIA).

(The following was edited.) Although Social Security is not supposed to be decreased by more than half of the pension that you get, the AnyPIA calculator subtracts the half of your pension from your PIA at full retirement age, so that's why Social Security looks so negatively impacted by the WEP.

So for me, it seems like the best solution is to start receiving my rather stingy pension of $130 as soon as possible at age 55 and to wait to collect Social Security (or spousal benefits) until either full retirement age or age 70. (Minimizing the pension will also help minimize the tax torpedo effect later on.) In the meantime, the pension is so small that it will essentially be tax-free for fifteen years until it's added to any RMDs I receive at age 70. I may get more from the COLAs than I would get if I put the pension income into an interest-bearing account.

If I were to wait to take the pension at age 70, the greater dollar amount from my small pension (which would still be under $380) would have a much greater negative impact on my Social Security benefits than if I take the pension at age 55---even though taking the pension for fifteen years means that I've collected at least $23,400 from the pension already. (People with small pensions seem to be hit harder by WEP than people with larger pensions.)

I thus recommend carefully analyzing how your pension benefits are computed and when it seems to be a good idea to start collecting them. (Much larger pensions that increase at a high rate until a certain age may certainly be worth waiting for.)

Although I know the future of Social Security may feel at risk, pensions also are at risk, too, and I *think* that Social Security will be more secure and valuable than most pensions are. I would think most people should not start collecting Social Security at age 62 unless they have no other options for income or unless they have a short life expectancy---because there are many advantages to defer receiving Social Security until age 70 (and spending down your other assets in preparation for minimizing the tax torpedo).
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Old 11-26-2012, 04:45 PM   #32
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I have 10 years of low paying jobs, prior to my civil service career, then 8 years of part-time roughly $15,000 per year. I thought that would boost my SS, but apparently not... My SS statement shows $420 at age 62, but then I get the WEP, which the WEP calculator shows as $205 at age 62. In any event, SS will let me 'retire' on Saturday, Dec 1st, to be effective on my 62nd birthday in March, 2013. I'll do it on the SS website, and find out the final $ number a few days later.
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Old 11-26-2012, 05:14 PM   #33
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I think "low paying" is a relative thing. DW, who receives a gov't pension, got her 40 qtrs under SS with really low paying years. Think part time jobs in high school and college and, later in life, an adjunct faculty job at a local university where she taught 1 course per semester. Her WEP adjusted SS........ roughly $100/mo. Not even enough to pay for her Medicare Part B.

The first few years were low wages from part-time jobs in high school, then 1/2 yr after high school, and then 4 1/2 years of active duty enlisted pay in the Air Force. Also...somebody correct me if I'm wrong, but back in 1981 when I first started working for the federal government under CSRS, I really believe that I somehow got credit for at least maybe the first year of that. When did WEP kick in?

Side note:

Even though I worked under WEP for the fed, I was also a military reservist for all those years, from 1981 through 2008. I paid into SS every single time I got paid. However, I don't get credit for any of those contributions, and I don't believe that is fair at all. I understand getting nothing for non-contributory years in my fed/WEP job, but why shouldn't I get anything for what I actually DID contribute? Sorry to be so whiney...but damn!
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Old 11-26-2012, 05:29 PM   #34
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The first few years were low wages from part-time jobs in high school, then 1/2 yr after high school, and then 4 1/2 years of active duty enlisted pay in the Air Force. Also...somebody correct me if I'm wrong, but back in 1981 when I first started working for the federal government under CSRS, I really believe that I somehow got credit for at least maybe the first year of that. When did WEP kick in?

Side note:

Even though I worked under WEP for the fed, I was also a military reservist for all those years, from 1981 through 2008. I paid into SS every single time I got paid. However, I don't get credit for any of those contributions, and I don't believe that is fair at all. I understand getting nothing for non-contributory years in my fed/WEP job, but why shouldn't I get anything for what I actually DID contribute? Sorry to be so whiney...but damn!
You get credit for any year where SS earnings exceeded these amounts:



If you have 30 or more years of substantial SS earnings, you get your full benefit. I'm currently have SS earnings and while I can retire at the end of 2013, I'll work long enough to get 2014 to qualify for substantial earnings. It's worth another 5% in the calculation.
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Old 11-26-2012, 05:30 PM   #35
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I have 10 years of low paying jobs, prior to my civil service career, then 8 years of part-time roughly $15,000 per year. I thought that would boost my SS, but apparently not... My SS statement shows $420 at age 62, but then I get the WEP, which the WEP calculator shows as $205 at age 62. In any event, SS will let me 'retire' on Saturday, Dec 1st, to be effective on my 62nd birthday in March, 2013. I'll do it on the SS website, and find out the final $ number a few days later.
DMGO, if you take early retirement from Social Security at age 62, you will permanently reduce your Social Security benefits for the rest of your life, including any spousal benefits to which you may be entitled; you will also diminish your wife's spousal and survivor's benefits as well. Could you instead hold off on retiring from Social Security at either full retirement age or age 70 and use other assets instead? If there is any chance that you might work in the future, contributing more to Social Security, then it will pay to defer your Social Security retirement for that reason as well.

Please do make sure you have thoroughly reviewed the advantages of Social Security benefits on both your own earnings and your spouse's before you decide to take early retirement. If you're in good health, I would encourage you to hold off on filing for early retirement until you've read even more about the value of maximizing your Social Security benefits.
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Old 11-26-2012, 05:46 PM   #36
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DMGO, if you take early retirement from Social Security at age 62, you will permanently reduce your Social Security benefits for the rest of your life, including any spousal benefits to which you may be entitled; you will also diminish your wife's spousal and survivor's benefits as well. Could you instead hold off on retiring from Social Security at either full retirement age or age 70 and use other assets instead? If there is any chance that you might work in the future, contributing more to Social Security, then it will pay to defer your Social Security retirement for that reason as well.

Please do make sure you have thoroughly reviewed the advantages of Social Security benefits on both your own earnings and your spouse's before you decide to take early retirement. If you're in good health, I would encourage you to hold off on filing for early retirement until you've read even more about the value of maximizing your Social Security benefits.


I'm not entitled to anything from spouses SS, due to the government pension offset. She gets what I consider to be a generous SS on her own right. And according to the numbers coming off the SS WEP calculator, there's no reason to delay my SS benefit at all. I'll just take what is offered at this time, and no more working.
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Old 11-26-2012, 05:52 PM   #37
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Let me also suggest running the numbers in AnyPIA (the free software program from Social Security) for several different scenarios, and saving the results for each scenario under a file name describing the scenario.

(In my case, I have less than 20 years of substantial gainful activity, and quite a few years of very low income.)

Scenario 1: No pension

For example, I calculated what my Social Security benefit would be like if I waited until age 70 and if I had no pension at all:

$1134
(based on a PIA of 895.70; the PIA is the benefit I'd get at full retirement age)
The delayed increment factor for retiring at age 70 was 1.26667 (which gets applied to the PIA).

Scenario 2: Early pension, late Social Security

If I take my small non-Social Security pension early at age 55, receiving $130, but choose to retire from Social Security at age 70, my PIA is calculated to be 830.70 and my Social Security benefit at age 70 is calculated to be $1052. (Note that the PIA is decreased by $65, corresponding to half of my $130 pension.)

Generally speaking, it seems to be better for us for the half of the pension to be subtracted from Social Security far in the future rather than early on, when it would have the most impact on our Social Security benefits. The earlier you take your pension but the later you retire from Social Security, the less impact the WEP will have on you.

Scenario 3: Early pension, early Social Security

If I were to retire from LACERA at age 55 and then take early retirement from Social Security at age 62, my Social Security benefit would be reduced to $598 because
the PIA is $830.70 and I'd be penalized for retiring early. The actuarial reduction factor is 0.72083, which is applied to the PIA.

Scenario 4: Late pension, late Social Security

If I maximized my LACERA pension so that it was $360 at age 70, and retired from Social Security at the same age, then my PIA would be $715.70 and my Social Security
would be $906. As calculated by AnyPIA, I'd have a monthly income of $360 plus $906 for a total of $1266 in today's dollars if I retired at age 70 from both systems.

Compare that income above with the income in Scenario 2---collecting inflation-increased $130 at age 55 from LACERA for 15 years until age 70, and then getting $1052 from Social Security plus the LACERA adjusted pension that has been increased with COLAs. The monthly income from Scenario 2 would be at least $1182 plus the COLAs that had been accumulating for 13 years---probably pretty close to the $1266.

So, for my own situation, I think my best solution is to take my small pension as early as possible at age 55 and retire from Social Security at age 70 (Scenario 2). My Social Security is a more valuable and generous resource than my pension is, and I may also be able to contribute more to it.

People whose pensions are larger and/or which increase significantly up until age 62 or 65 or later may benefit from waiting to collect those pensions until later, however.
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Old 11-26-2012, 05:54 PM   #38
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I noticed that the WEP will not affect SS if we work for 30 years (substantial earnings) or if we work for the federal government. Does anyone know how many years for the federal government we need to work for the WEP not to impact our SS payments negatively ?

I may as well go for a couple of locum tenens positions for federally-run Indian reservation clinics once I retire, this way avoiding the WEP - who knows?
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Old 11-26-2012, 06:09 PM   #39
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I'm not entitled to anything from spouses SS, due to the government pension offset. She gets what I consider to be a generous SS on her own right. And according to the numbers coming off the SS WEP calculator, there's no reason to delay my SS benefit at all. I'll just take what is offered at this time, and no more working.
Many financial experts say that a major mistake many people make is to claim Social Security too early. The Social Security benefits also increase a great deal after full retirement age up until age 70. Social Security provides other benefits as well, such as survivor's benefits. Another benefit is that some of the Social Security may be tax-free to you, and at most, only 85% of it will be taxable (compared to 100% of your pension income and/or required minimum distributions). If you have other income you can live off of instead, your tax situation in the future could be much improved if you spend down your sources of highly taxed income instead and maximize your Social Security instead.

I haven't looked fully into the government pension offset, however. Have you had anyone else doublecheck your figures? Have you confirmed with Social Security that you would be entitled to none of your wife's Social Security benefits?
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Old 11-26-2012, 06:33 PM   #40
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Your Social Security benefits will be reduced by two-thirds of your government pension. In other words, if you get a monthly civil service pension of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits. For example, if you are eligible for a $500 spouse’s, widow’s or widower’s benefit from Social Security, you will receive $100 per month from Social Security ($500 – $400 = $100).

from: Government Pension Offset - Social Security Publication 05-10007


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