Will taking early state pension reduce WEP?

[Cincy]

I have a WEP question that I have been unable to find the answer to. My spouse has 14 years of state teachers retirement years (no SS withheld) She now has a job that pays SS. According to the WEP calculations on the SS website she will take quite a hit on SS based on her pension she will receive at 65. My question is how would taking early pension at 62 effect how muchSS is reduced by WEP? For example, taking at 65 is $1000/month pension (without considering WEP) and taking at 62 is around $700/month (w/o WEP). I would think that taking pension early would result in less of a hit on SS from WEP. Is this true? Are there any strategies that help make the WEP reduction less?

Thanks for any suggestions.

 

[nun]

I have a WEP question that I have been unable to find the answer to. My spouse has 14 years of state teachers retirement years (no SS withheld) She now has a job that pays SS. According to the WEP calculations on the SS website she will take quite a hit on SS based on her pension she will receive at 65. My question is how would taking early pension at 62 effect how muchSS is reduced by WEP? For example, taking at 65 is $1000/month pension (without considering WEP) and taking at 62 is around $700/month (w/o WEP). I would think that taking pension early would result in less of a hit on SS from WEP. Is this true? Are there any strategies that help make the WEP reduction less?

Thanks for any suggestions.

Yes a $700 pension will reduce SS less than a $1000 one. Use the SSAs WEP calculator to find the exact numbers.

 

[akck]

I thought the pension amount had no effect on SS in relation to WEP. What's important is the number of SS contributing years you have. At 30 years of substantial SS years, there is no reduction. It goes from 90 to70% at 20 years.

Now, the pension size does have an effect for GPO. This would be if she collects on your SS. Her SS based on your earnings would be reduced by 2/3's.

 

[nun]

I thought the pension amount had no effect on SS in relation to WEP. What's important is the number of SS contributing years you have. At 30 years of substantial SS years, there is no reduction. It goes from 90 to70% at 20 years.

Now, the pension size does have an effect for GPO. This would be if she collects on your SS. Her SS based on your earnings would be reduced by 2/3's.

The WEP amount will depend on the number of years of SS contributions and the amount of SS and non-SS pension.

 

[Cincy]

Yes a $700 pension will reduce SS less than a $1000 one. Use the SSAs WEP calculator to find the exact numbers.

So then it would make sense to choose to start pension payments at 62 rather than 65 if the goal is to reduce the effect of WEP. I realize there are other factors to consider also, but it seems like this would be a huge factor when making the decision as it seems to increase SS by about 10% when I run the numbers on the WEP calculator.

Has anyone been in this situation and come to the same conclusion? Is it correct that you use the pension amount you are receiving to compute WEP even if you are receiving reduced early retirement pension?

 

[Mulligan]

I have used the calculator before and I think SS doesn't care when you begin drawing, just what she will be getting when she draws SS. Remember unless I am wrong if pension is COLA'd it will be higher at 65, thus lowering SS at that point. I feel sorry for people like your wife caught in the middle of this problem career wise. My WEP numbers are brutal, but I do not need sympathy because my career was non SS, and all earned SS was of PT variety through the years. My numbers were about $500 SS at full retirement. WEP at 62 was about $100, and full retirement WEP SS was $150. Nice haircut, will not even cover my Medicare.


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