Does Social Security's WEP apply to my situation?

[Budatx]

Hello,

A long time participant in this forum. Lots of excellent advice. I have a WEP related question.

From 1977-1992 (15 years) I worked for a city in TX. The 1st 7 years, I paid into Social Security, then the city opted out. So, for next 8 years I did not pay into SS at all.

Since 2009, I've received a pension based on my 15 years service . I've always believed that due to not paying into SS for 8 of the 15 years, I would be hit with the WEP reduction. Currently, due to other jobs that paid into SS, I have 29 years of "SS Substantial Earnings." In May 2021, I'll complete 30 years of substantial earnings. I hit my FRA in Feb. 2022.

Can anyone help me confirm if WEP actually applies to my situation? (Years ago, I asked the agent at local SS office and she said, yes, but did not actually look at my record.) Things at work are changing and not sure if I want to, or can last until May. Thank you!

 

[Alan]

If you have 30 years of paying into SS then WEP does not apply at all. It begins to taper off at 20 years and is zero at 30.

 

[Irishgirlyc58]

I fall under WEP and have researched this to the nth degree. The poster above is correct, with 30 years of substantial earnings it will [NOT] affect your benefits.


Mod Edited to reflect subsequent correction.

 

[Sunset]

I fall under WEP and have researched this to the nth degree. The poster above is correct, with 30 years of substantial earnings it will affect your benefits.

I'm pretty sure with 30 yrs of Substantial SS earnings, WEP does not apply.

 

[Irishgirlyc58]

I'm pretty sure with 30 yrs of Substantial SS earnings, WEP does not apply.

Sorry! I meant will NOT affect your ssa.
Thanks to catching that.

 

[Sunset]

Sorry! I meant will NOT affect your ssa.
Thanks to catching that.

I figured that, but posted so other readers would not be confused.

By the way... Welcome !

 

[FI50]

Edited... Actually read the article and not the table only. With 30 years or more Substantial SS earnings, WEP does not apply.

https://www.federalretirement.net/wep.htm#Substantial_Earnings

 

[NoiseBoy]

This is from SSA.gov. I thought I'd post it even though the prior responses were all 100% accurate so that the OP could see that the difference in their benefit calculation for 29 vs. 30 years of substantial earnings is not significant. If work has turned toxic, I think the OP can hit the eject button. There is also a specific SSA WEP calculator the OP can use with their own earnings history to explore their options.

HOW THE WEP WORKS: Social Security benefits are calculated by applying three different percentages to a person's lifetime average indexed monthly earnings (AIME) and adding them up to obtain the worker's monthly benefit (primary insurance amount (PIA)) at full retirement age. For most beneficiaries in 2015, the PIA equals the sum of:

90 (or 85 for OP) percent of the first $826 of AIME, plus
32 percent of AIME over $826 and through $4,980, plus
15 percent of AIME over $4,980.
The WEP PIA replicates the regular PIA but scales down the first percentage from 90 percent to 40 percent in increments of five percentage points for workers with less than 30 years of coverage (YOCs). Thus, workers with 30 or more YOCs have a first PIA factor of 90 percent, workers with 21–29 YOCs have a first PIA factor between 45–85 percent, and workers with 20 YOCs have a first PIA factor of 40 percent.

 

[Irishgirlyc58]

I figured that, but posted so other readers would not be confused.

By the way... Welcome !

Thanks @Sunset! I appreciate the welcome.
I’m retiring sometime in 2021.
I just can’t decide between March at 62.5 or September at 63.

 

[Irishgirlyc58]

This is from SSA.gov. I thought I'd post it even though the prior responses were all 100% accurate so that the OP could see that the difference in their benefit calculation for 29 vs. 30 years of substantial earnings is not significant. If work has turned toxic, I think the OP can hit the eject button. There is also a specific SSA WEP calculator the OP can use with their own earnings history to explore their options.

HOW THE WEP WORKS: Social Security benefits are calculated by applying three different percentages to a person's lifetime average indexed monthly earnings (AIME) and adding them up to obtain the worker's monthly benefit (primary insurance amount (PIA)) at full retirement age. For most beneficiaries in 2015, the PIA equals the sum of:

90 (or 85 for OP) percent of the first $826 of AIME, plus
32 percent of AIME over $826 and through $4,980, plus
15 percent of AIME over $4,980.
The WEP PIA replicates the regular PIA but scales down the first percentage from 90 percent to 40 percent in increments of five percentage points for workers with less than 30 years of coverage (YOCs). Thus, workers with 30 or more YOCs have a first PIA factor of 90 percent, workers with 21–29 YOCs have a first PIA factor between 45–85 percent, and workers with 20 YOCs have a first PIA factor of 40 percent.

I think the percentages were swapped for a specific amount subtracted from your ssa at FRA.
The amount is set based on the year you turn 62. I turned 62 in 2020 so my amount is $480.
That $480 gets decreased for every year after 20 years with substantial earnings and eliminated at 30 years substantial earnings.
If you retire at 62 you take the amount you would be eligible to at FRA, subtract $480 from that amount. Take the new amount and reduce using SSA multiplier for age you are retiring. If I retire at 62.5 the multiplier is 74.2%.
WEP calculator should give you the amount you are eligible to.

 

[Sunset]

I'm subject to WEP, but haven't started SS, so don't have actual experience with it.

I do feel some comfort, in that they claim the maximum they will reduce SS by is 1/2 of the outside pension.

Which makes sense, if I get a $100 pension/mo , It would be wrong to reduce SS by $480 or any number over $100.

 

[Irishgirlyc58]

So true!