Social Security WEP Reduction?

[DMGO]

Ok, a little history... I am a retired federal employee, retired Dec, 2004. I have worked part-time in a store since then, and have earned the balance of the required 40 credits to qualify for Social Security. I have downloaded their Any PIA calculator from the SS website, but don't understand the results. What will my actual SS benefit be? The PIA at elegibility, or the PIA after WEP? This is a tough calculator to use. Thanks

 

[rothlev]

I have not used that calculator, but have used the on line WEP calculator where you manually type in your wages and your pension amount. It was easy to use and very accurate as DH social security benefit came out exactly as it said. Calculators: Online Calculator
Use your statement to fill in the amounts. You can get this on line also if you don't have one.

 

[RE2Boys]

Your monthly benefits will be based on the PIA after WEP. The difference in the two values is 0.5 times $749 or $375, which is the maximum reduction due to WEP for 2011. Of course the PIA only applies if you begin SS on your full retirement age (in my case at 66). Your actual benefits will be less or more depending on if you begin drawing benefits before or after your full retirement age.

 

[Mulligan]

If your mantra is "every little bit helps", then you maybe satisfied with results. I fall under the WEP and have used the WEP calculator, and believe me it was a true hair cut on benefits. It was a flat top shaved tight on the sides. I hope you fair better!

 

[ronin]

This chart helps determine your maximum haircut.

wep-chart

Using the WEP calculator, my personal reduction over PIA is 46%.

 

[DMGO]

I have not used that calculator, but have used the on line WEP calculator where you manually type in your wages and your pension amount. It was easy to use and very accurate as DH social security benefit came out exactly as it said. Calculators: Online Calculator
Use your statement to fill in the amounts. You can get this on line also if you don't have one.

OK, I ran the WEP calculator on the SS website, and that shows my monthly $ amount as less than HALF of what shows on my SS statement (statement doesn't show WEP, of course). I know of several people with all different income backgrounds, (all CSRS retired government) and only SOME have been hit this hard by WEP. I even know of one, who isn't even an American citizen, who worked 32 years for USPS, and only had 40 quarters of SS coverage, and he gets more than what I will, at least according to the WEP calculator. That's why I tried the AnyPia calculator available for download at SS. I just don't understand how my SS could be so little...

 

[obgyn65]

You are not the only one. Some of us will be hit pretty hard by WEP. Since I have worked many years abroad, I will have a (small) pension from abroad but my SS will have maximum deduction. I have worked only 10 years in the US, so I guess I will have the full $380 deducted.

OK, I ran the WEP calculator on the SS website, and that shows my monthly $ amount as less than HALF of what shows on my SS statement (statement doesn't show WEP, of course).

 

[RE2Boys]

I just don't understand how my SS could be so little...

My expected SS benefit get cuts nearly in half due to WEP. Then again, I've got about 5 years of my earnings record with zero SS income, another 4 years of Vietnam era military pay (low pay), 5 years of HS/college summer/part time jobs, and 15 years of part time jobs in retirement at a fraction of my career income jobs. That leaves only 6 years of SS wages where I was making some decent money (>$15K per year adjusted) out of 35 years used.

Using the standard SS formula, I would look like I hardly ever had a decent job. Which is not true. Which is why WEP applies a different formula with less bias to those who appear to be low income folks. Considering how much SS taxes I've paid over my working life, even with WEP, it's a great deal. And my minor kids are still eligible for benefits, unless I wait past 67 to apply, in which case they'll no longer be minors.

 

[rescueme]

... 4 years of Vietnam era military pay (low pay...

Depending on your service dates, you may get extra credits:

Retirement Planner: Special Extra Earnings for Military Service

I served '67-'71, so I get one year of adjustment when I file, plus the extra $300/quarter for my service time.

Just an FYI...

 

[RE2Boys]

, plus the extra $300/quarter for my service time.

Just an FYI...

Thanks for the info. The SS website says it is automatically credited to your record so I assume it is in the annual SS statement we get, so already factored in......maybe. Good to know so I can double check. Thanks again. My service time was 1971-1975

 

[Rich]

Thanks for the info. The SS website says it is automatically credited to your record so I assume it is in the annual SS statement we get, so already factored in......maybe. Good to know so I can double check. Thanks again. My service time was 1971-1975

I was in service from 1964~1968. When I went to the SS office I had to point out this regulation to the gentleman assisting me (he was nice and helpful). So, don't assume they will automatically credit you this income!

 

[Alan]

I guess I will be subject to WEP for the time I worked in England and earned the UK equivalent of SS.

Closer to the time I will have to look into the Tax Treaty between the UK and USA to see how to deal with this.

Is it similar to folks living here and collecting SS from 2 countries?

 

[Sue J]

I have not used that calculator, but have used the on line WEP calculator where you manually type in your wages and your pension amount. It was easy to use and very accurate as DH social security benefit came out exactly as it said. Calculators: Online Calculator
Use your statement to fill in the amounts. You can get this on line also if you don't have one.

Thanks for the link. DH gets a government pension and has not completed his SS credits. He only needs another 4 credits. Since he retired he's talked about finishing his credits and I was able to use the calculator to figure out how the WEP would affect him if he went that route. It's good news as his SS payment would still be a few hundred bucks even after the WEP reduction.

I know it's just an estimate but it makes it clear that finishing the 4 credits would be worth the time and effort.

 

[Mulligan]

My WEP reduces my SS at 66 from $365 to $165. If I take it at 62 it is $125. If I delay 4 years it is about 33% higher! I think I will just take the $125 early and live like a king!

 

[rothlev]

My WEP reduces my SS at 66 from $365 to $165. If I take it at 62 it is $125. If I delay 4 years it is about 33% higher! I think I will just take the $125 early and live like a king!

well just don't spend it all in one place.

 

[Mulligan]

well just don't spend it all in one place.

I will try not to. It will be an important anchor to my retirement, providing 1.8% of my monthly income.

 

[DMGO]

I have not used that calculator, but have used the on line WEP calculator where you manually type in your wages and your pension amount. It was easy to use and very accurate as DH social security benefit came out exactly as it said. Calculators: Online Calculator
Use your statement to fill in the amounts. You can get this on line also if you don't have one.

Anybody else here find the SS WEP calculator to be a LOT lower than what's expected? It shows less than HALF of regular (age 62) retirement. In any event, I'm doing the actual signup next Saturday, Dec 1 online. I'll post the final results as soon as I know for sure...

 

[martyb]

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.

 

[nun]

I guess I will be subject to WEP for the time I worked in England and earned the UK equivalent of SS.

Closer to the time I will have to look into the Tax Treaty between the UK and USA to see how to deal with this.

Is it similar to folks living here and collecting SS from 2 countries?

The treaty won't help you with WEP, it's purely a SSA thing. The treaty will tell you where your SS will be taxed. If you are a US resident both US and UK SS will only be taxed in the USA. If you are a UK resident US SS is only taxable in the UK, but there is some argument on where your UK SS would be taxable. The intent of the treaty is to have it only taxable in the UK, but the wording actually allows for both UK and US taxation.

Interestingly, if your UK state pension was paid for by voluntary NI payments it doesn't count towards WEP. 27 of my 30 years of UK payments are voluntary, but I'll still get the max WEP because of my MA state pension.

 

[nun]

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.

 

[Alan]

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.

 

[DMGO]

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?

 

[martyb]

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!

 

[martyb]

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.

 

[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.