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Old 11-26-2012, 06:35 PM   #41
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Does anyone know how many years for the federal government we need to work for the WEP not to impact our SS payments negatively ?
To the best of my knowledge WEP disappears at 30 years of earnings. ( any social security earnings)
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Old 11-26-2012, 06:41 PM   #42
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Many teachers ( who do not pay into social security) are unpleasantly surprized when their spouse dies and they lose completely all social security benefits from his/her account.

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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
People posting here with a tiny social security benefit amount due to WEP often just collect early as the amount is so little. That is what we did also.
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Old 11-26-2012, 06:41 PM   #43
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Originally Posted by rothlev View Post
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


Are you talking about WEP or GPO?
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Old 11-26-2012, 06:48 PM   #44
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I was answering Lois Lane who didn't know what GPO was
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Old 11-26-2012, 07:08 PM   #45
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I was answering Lois Lane who didn't know what GPO was
I beg your pardon. Sorry.

Might have helped if you quoted Lois or something.
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Old 11-26-2012, 07:18 PM   #46
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I beg your pardon. Sorry.

Might have helped if you quoted Lois or something.
I beg your pardon. Sorry.
My mistake
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Old 11-26-2012, 07:46 PM   #47
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Many teachers ( who do not pay into social security) are unpleasantly surprized when their spouse dies and they lose completely all social security benefits from his/her account.
It sounds like the reason for that is because they have a pension based on employment that paid nothing into the Social Security system, though. If they hadn't worked at all (also paying nothing into Social Security), they would still have received the Social Security benefits.

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People posting here with a tiny social security benefit amount due to WEP often just collect early as the amount is so little. That is what we did also.
It still seems to me that it would still be better to defer the Social Security as much as possible, no matter how small it is, unless one is in poor health. Social Security benefits can increase for three separate reasons over time (wage indexing, inflation, and future contributions from going back to work) and steadily outpace what one is able to earn with private investments, so taking a small amount of money early doesn't seem worth the risk. The Social Security dollars are also worth more because they're not as highly taxable as the equivalent number of dollars from an IRA.

The following web page has some links to help people learn more about claiming Social Security (and why they should maximize it as much as possible):

Social Security Research On When to Start Benefits and Benefit Taxation

Prudential has a paper that's very useful to read, but the link for Prudential's paper is outdated; the new link is here:

http://research.prudential.com/docum...=website&cid=1

For example, a worker who does have a lot of Social Security earnings (such as DMGO's wife) generally should delay claiming them until age 70, but that same person could do a "file and suspend" at full retirement age so that the spouse can apply for spousal benefits at either age 62 or his or her own full retirement age. (Spousal benefits don't increase after full retirement age, so there's no benefit in waiting until age 70.)

In DMGO's case, his GPO might wipe out his spousal benefit on his wife's earnings if it were attempted to be claimed at age 62, but perhaps not at full retirement age because his spousal benefit would be larger. (Make sure that none of the exceptions apply when calculating GPO; in my case, all my work on which my pension is based was performed before 2004, so I would not have a GPO.) The WEP also needs to be based only on the pension that had no Social Security tax on it.

This is complicated enough that it would be easy for a lot of people to make significant errors calculating what their WEP or GPO would be!

(By the way, I had known what GPO was, but hadn't had an understanding of how it was calculated. Thanks for providing the reference to it.)
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Old 11-26-2012, 07:51 PM   #48
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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?

No federal employees who began working after the early to mid-80's are affected by the WEP. They fall under the FERS retirement system, and contribute to SS just like other non-fed workers. Those feds who fall under the older CSRS retirement system, which ended in early-mid 80's did not contribute to SS from thier fed payroll, so do not qualify for SS, or at least not the full amount.

If they have at least 40 quarters or 10 yrs of SS covered work where they did contribute to SS, then they will get at least something. That something will be reduced by the WEP.


Some of us, like myself, did indeed contribute money to the SS, but it wasn't enough money(besides my earliest years), according to the government, for us to get credit for it, or to receive anything back via Social Security. I'll get a small check based on my SS covered wages back in the early 70's to early 80's. but NONE of the contributions I made from early 80's through 2010 were quite high enough for me to get any credit for.

I think that sucks.
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Old 11-26-2012, 09:21 PM   #49
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Some of us, like myself, did indeed contribute money to the SS, but it wasn't enough money(besides my earliest years), according to the government, for us to get credit for it, or to receive anything back via Social Security. I'll get a small check based on my SS covered wages back in the early 70's to early 80's. but NONE of the contributions I made from early 80's through 2010 were quite high enough for me to get any credit for.

.
You may not have earned enough recently to earn "quarters" of SS coverage to attain the required 40 quarters that entitle you to SS benefits, but anything you earned that was subject to SS tax WILL be included in your lifetime income in computing the size of your monthly check. So, once you have the 40 qualifying "quarters", all of your earnings, up to your highest 35 years, are used in computing your benefits. Every year I work in retirement replaces one of the "zero" earning years I have on record. It makes a difference (but admittedly, not a large one).
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Old 11-26-2012, 10:21 PM   #50
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I thought if the amount of SS paid in didn't reach the level of "substantial earnings" as defined by the IRS, and which increases each year, then none of the earnings counted at all. I certainly hope you're right! That would make me feel a little better.
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Old 11-27-2012, 05:40 AM   #51
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Acording to the SS own website :

Social Security Publications


"The Windfall Elimination Provision does not apply if:
  • You are a federal worker first hired after December 31, 1983;
  • You were employed on December 31, 1983, by a nonprofit organization that did not withhold Social Security taxes from your pay at first, but then began withholding Social Security taxes from your pay;
  • Your only pension is based on railroad employment;
  • The only work you did where you did not pay Social Security taxes was before 1957; or
  • You have 30 or more years of substantial earnings under Social Security." (emphasis mine)
My question is: how long does someone need to be a federal worker (if hired after 12/31/1983) for the WEP not to apply ? 10 years ? 40 years ? 2 months ?

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To the best of my knowledge WEP disappears at 30 years of earnings. ( any social security earnings)
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Old 11-27-2012, 05:50 AM   #52
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OK. So I should not be affected by the WEP if I work for some time in the future for the federal government, correct ? My question is: how long do I need to work in a government position not to be affected by the WEP ? As mentioned above, theoretically I could find a couple of locum tenens positions in Indian reservations government-run clinics for example, providing medical care a few weeks a year, and not be impacted by the WEP when I reach 62 or 67, correct ?

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Originally Posted by martyb View Post
No federal employees who began working after the early to mid-80's are affected by the WEP. They fall under the FERS retirement system, and contribute to SS just like other non-fed workers.
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Old 11-27-2012, 05:53 AM   #53
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I wish sscritic from Bogleheads would help us here too with these types of questions. :-)
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Old 11-27-2012, 08:19 AM   #54
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I wish sscritic from Bogleheads would help us here too with these types of questions. :-)
You could pop over there and ask him - then let us know what he says

I would think that if you have worked and earned a pension in another country then working for the federal government as you suggest would not reverse that.

The WEP is applied one time only - when you first apply for SS. So, timing is all important.

Take a look at this discussion.

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1. one problem is the 'substantial earnings'. SS defines it for each year. I missed one year by 50 cents, so that year of work wasn't counted.

2. you only get WEP'd once. So if you know you are getting a UK state pension of, say, £1000 a year and know you will get a UK private pension of £10,000 a year, you'd want to start receiving the UK state pension, get WEP'd, then start receiving the UK private pension.

3. the exchange rate of WEP is the day the administrator does your case. And it can never be changed. So if the exchange rate is $2.00 your £1000 UK state pension will be equal to $2000. If it's $1.5 your UK state pension will be valued at $1500 (remember - this will result in a lifetime decrease in your SS payments so it's in your interests to have that value as low as possible).
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Old 11-27-2012, 09:10 AM   #55
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Acording to the SS own website :

Social Security Publications


"The Windfall Elimination Provision does not apply if:
  • You are a federal worker first hired after December 31, 1983;
  • You were employed on December 31, 1983, by a nonprofit organization that did not withhold Social Security taxes from your pay at first, but then began withholding Social Security taxes from your pay;
  • Your only pension is based on railroad employment;
  • The only work you did where you did not pay Social Security taxes was before 1957; or
  • You have 30 or more years of substantial earnings under Social Security." (emphasis mine)
My question is: how long does someone need to be a federal worker (if hired after 12/31/1983) for the WEP not to apply ? 10 years ? 40 years ? 2 months ?
That is referring to federal hires after 12/31/1983 who PAY into social security verus the prior employees under CSRS who did not pay in. You will be subject to WEP if you have a pension from earnings where you did not pay into social security.
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Old 11-27-2012, 09:42 AM   #56
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I think the more substantial and length of years worked in SS, the less the bite. I have a friend who is retiring this year with a government non SS contributing pension, that had a little over 20 years of substantial SS earning before a career change. He was worried the WEP would buzz cut him. He went in to SS office and found out he would be getting over a $1000 a month still, and only losing a couple hundred bucks. He was very pleased he said. His other pension will be around 50k, so he must have had some protection of his SS, by his extended contributing years of all substantial income even though it wasn't 30.
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Old 11-27-2012, 10:22 AM   #57
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Yeah, that's my problem...none of the years I contributed to SS was at or above the "substantial" threshold. An enlisted reservist only earns a few bucks a year. I think my highest year ever was maybe $13000, and that was a one-time only circumstance. From the 80's, we're talking about $2000-$3000 a year, up through the 2000's. Not counting the one year year where I earned the $13000 (still not quite enough to be considered "substantial earnings" for SS, I was earning in the range of $6000-$7000_$10,000. We're talking about one weekend a month, typically here. My final year, prior to retirement, I was getting paid a little more than $600 for a 2-day weekend drill ($7200-$7300 per yr) plus $1000-$1500 for my 2 week annual tour. Only around $9000. Still...Social Security was witheld, along with state & federal taxes. I feel like that SS contribution should add up to something for me...especially since it was cumulative over all those years. The way I read it, unless the amount of SS paid income reaches the "substantial earnings" threshold...it counts for nada. I'd sure like to be proven wrong.
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Old 11-27-2012, 11:13 AM   #58
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The way I read it, unless the amount of SS paid income reaches the "substantial earnings" threshold...it counts for nada. I'd sure like to be proven wrong.
Using the WEP calculator and putting in and then taking out those earnings ( and comparing the output) you could certainly figure out how much, if any, difference they make
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Old 11-27-2012, 11:20 AM   #59
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I have to believe they are counting for something, Marty, just not as much as if it had been substantial. I mirrored your type of of income, except for only about 12 years and only 2 substantial years. In today's dollars with WEP mine will be $125. So they had to count for something, or I would be getting nothing. I used to think I was getting ripped off, then learning through this forum, I learned about the "bend points" and the emphasis of the program being directed at "lower income" workers getting a higher percentage of their pay vs. "higher income". So, I "get it", so it doesn't bother me now at all. But it doesn't explain how a person without a pension such as a spouse can do what we did, and not be subject to WEP, even though they deliberately worked part time.
But then again, I would gladly give up all my social security to get rid of this part of SS.

http://www.investmentnews.com/articl...OG05/120719949

I an old geezer over 66 can marry a young wife (as young as he wants, or as young as the women is willing, I guess) and start a new family and SHE gets benefits AND the child does too. What in the world is that all about. A reward for old age virility? Why have your children young, wait until your old and have the government pick up the tab! This has been called the "Viagra College Fund". So a 66 year old man can marry a 40 year old woman, and she get SS benefits until the child is 16 and the child gets the benefits until 18. Somebody tell me this is not right, as it is the craziest thing I ever heard of!
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Old 11-27-2012, 01:31 PM   #60
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The way I read it, unless the amount of SS paid income reaches the "substantial earnings" threshold...it counts for nada. I'd sure like to be proven wrong.
You still get the SS credit. It just means you'll get 40% of the first $767 of income versus the 90% you'd have gotten without WEP. Substantial earnings only helps you if you have 20+ years of them. After 20 years, you get a 5% increase each year up to 30 years where you get the full 90% benefit.

In the past, I've recommended as a rule of thumb, that you figure you'll get 40% of your SS income. It works for most because most people falling under WEP have SS incomes near or below the $767. It used to work for me, but then I switched jobs and my SS income increased.
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