WEP Calculator Confusion - Appears to be a Ceiling

[ShokWaveRider]

I Downloaded and installed the SS WEP Calculator, entered all DW's info. Then Entered all the earnings data and the Non covered Pension amount as instructed. The Calculator is available from the SS.gov website. All I did was Google it to find it.

The Result was a 50% offset of $130 a month ($65) subtracted from her PIA. OK I understand that.

For grins I input a bunch hypothetical amounts. Started At $200 and went all the way up to $1000, after $400 a month the PIA amount stabilized and did not decrease.

Does anyone understand the complex calculation?

 

[Teacher Terry]

Yes I used the calculator before applying for SS. There is a maximum amount that they subtract. If I remember correctly I thought it was a little over 400.

 

[ShokWaveRider]

Thanks, unfortunately it does not appear to say how the formula works. I assume (You know what that means) the downloadable calculator is accurate as long as one fills in the correct numbers.

I think I found some info. The WEP Chart here seems to dictate how much the Max WEP is for a Given amount of contribution years.

https://www.ssa.gov/planners/retire/wep-chart.html

 

[oldphd]

Thanks, unfortunately it does not appear to say how the formula works. I assume (You know what that means) the downloadable calculator is accurate as long as one fills in the correct numbers.

I think I found some info. The WEP Chart here seems to dictate how much the Max WEP is for a Given amount of contribution years.

https://www.ssa.gov/planners/retire/wep-chart.html

The basic formula is that you have a maximum amount of WEP reduction based on your year of eligibility, typically when you turn 62. This amount goes up with time, presumably with the COLA % or something.

BUT... the important part to understand is that if you have 20 years of substantial earnings (which also vary with time), you have the full reduction. After that, each year of additional substantial earnings you reduce the amount you pay by 10% of the reduction. IOW
Years of substantial earnings/% of WEP reduction
0/100
1/100
...
20/100
21/90
22/80
23/70
...
28/20
29/10
30/0

Hope that makes sense...

Edit: Should have added that there is a maximum amount of WEP reduction as well, the above assumes you have a decent amount of earnings in SS...

 

[Kwirk]

By law, the Windfall Elimination Provision cannot cut your Social Security payment by more than half of the amount of your monthly pension, and it cannot zero out your retirement benefit.

If you have 30 or more years of “substantial earnings” on which you paid Social Security taxes, the WEP does not apply.

Here's a nice visual aid:

https://www.ssa.gov/planners/retire/wep-chart.html

 

[timo2]

I found that the pay (non-free) 'maximize social security' site did an accurate job with GPO and WEP.

 

[Teacher Terry]

The free calculator on the SS site is accurate.

 

[Starper]

How does WEP work if you choose to receive your pension, which is affected by WEP, as a lump sum? For example, I can receive my small corporate pension from an overseas company as a lump sum at age 55 or a bigger lump sum at 65 or as monthly pension starting from 65. If I started receiving social security at 67 and get a lump sum corporate pension before that, will it be subject to WEP?

I will have around 10-12 years of us social security credits if that matters.