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Knocking Down Some Windfall Elimination Provision (WEP) Misconceptions

Category: Financial and taxes in retirement

July 4, 2020 — Our friend Robert Powell at TheStreet.com just wrote a very helpful article for people who worked for governments or non profits and did not pay into Social Security for much of their work lives. They are usually concerned that they won’t get Social Security retirement payments. In “Did You Work for a Government and Not Pay Social Security“, Powell writes to straighten out some misconceptions.

The Windfall Elimination Provision (WEP) reduces your Eligibility Year (ELY) benefit amount before it is reduced or increased by early retirement, delayed retirement credits, cost of living adjustments (COLA), or other factors. If applied, your Social Security retirement payments will be lowered.

Not to worry if:

You have 30 years of substantial Social Security earnings. Your SS benefit will not be reduced

You will still get some benefit if:

You have 40 Social Security earning quarters. Your benefit might be reduced by up to $480, but you will still get most of your benefit. The more quarters you have credit for the less the WEP taken out.

You won’t get any benefit if:

You have less than 40 Social Security earning quarters. This number is the eligibility cutoff for any worker hoping to Social Security retirement benefits.

For further reading:

SS Windfall Elimination Factsheet

Posted by Admin on July 4th, 2020

5 Comments »

  1. I retired from Fed Civil Service (CSRS). My wife paid social security (well over 10 years) and later retired from Fed Civil Service (FERS). Am I eligible for her SSC?

    by Mike Hipschen — July 8, 2020

  2. “You have 40 Social Security earning quarters. Your benefit might be reduced by up to $480, but you will still get most of your benefit. The more quarters you have credit for the less the WEP taken out.” This is not true!

    Your benefit will be reduced by much more than $480. It can be reduced by more than a thousand dollars! I worked for the state of Massachusetts for 35 years. I also worked for private companies throughout my career, often earning the “Substantial Social Security Earnings” which is just over minimum wage for full time work. If your work 20 years, you earn 40% of what you would ordinarily receive from Social Security. For example, if you would ordinarily receive $3,000 a month, and you worked for a government agency that does not contribute to Social Security, you will get 40% of that which is less than half. A reduction of over $1500.

    This was created to avoid “double dipping” but it is unfair as people earned the right to collect their full amount. I am 66 and will not reach 30 years of Substantial earnings until I am 70, but will be close to it. I worked very hard to reach this level. And I am tired!

    I became a “pro” at Windfall Elimination because it impacts me greatly.

    This is the amount you have to make each year beyond your government job:
    Year Substantial earnings
    1937–1954 $900
    1955–1958 $1,050
    1959–1965 $1,200
    1966–1967 $1,650
    1968–1971 $1,950
    1972 $2,250
    1973 $2,700
    1974 $3,300
    1975 $3,525
    1976 $3,825
    1977 $4,125
    1978 $4,425
    1979 $4,725
    1980 $5,100
    1981 $5,550
    1982 $6,075
    1983 $6,675
    1984 $7,050
    1985 $7,425
    1986 $7,875
    1987 $8,175
    1988 $8,400
    1989 $8,925
    1990 $9,525
    1991 $9,900
    1992 $10,350
    1993 $10,725
    1994 $11,250
    1995 $11,325
    1996 $11,625
    1997 $12,150
    1998 $12,675
    1999 $13,425
    2000 $14,175
    2001 $14,925
    2002 $15,750
    2003 $16,125
    2004 $16,275
    2005 $16,725
    2006 $17,475
    2007 $18,150
    2008 $18,975
    2009–2011 $19,800
    2012 $20,475
    2013 $21,075
    2014 $21,750
    2015-2016 $22,050
    2017 $23,625
    2018 $23,850
    2019 $24,675
    2020 $25,575

    IMPORTANT:
    Years of substantial earnings Percentage
    30 years or more 90 percent
    29 years 85 percent
    28 80 percent
    27 75 percent
    26 70 percent
    25 65 percent
    24 60 percent
    23 55 percent
    22 50 percent
    21 45 percent
    20 or less 40 percent

    by joanne — July 8, 2020

  3. joanne:

    I think that Mike is asking about receiving a spousal benefit based on his wife’s SS record and not about his own SS record. Only your own SS benefits are subject to the Windfall Elimination Provision (WEP). The law that Mike will be subject to is the Government Pension Offset (GPO). In Mike”s case, his civil service annuity under Civil Service Retirement System (CSRS), which was not subject to Social Security withholding, will offset any spousal SS benefits in most cases.

    by LS — July 9, 2020

  4. I tried getting spousal benefits on my husband’s SS at age 66. I did not qualify because of my own WEP. I would have qualified if I had not been receiving my state pension. So Mike will qualify if he does not receive a state pension. My husband also teaches at a state college and has not retired yet. He gets his full SS now at age 73 but when he retires from being a professor, it will be cut in half. Hence he is not retiring yet.

    It is frustrating because we paid into both into both systems–the state and SS via different jobs. We worked very hard, holding down 2 jobs to get to a point of a comfortable retirement (after putting 3 kids through college, etc.) WEP has been voted down repeatedly but it seems unfair to me who has worked long and hard for 45 years!

    by joanne — July 9, 2020

  5. Joanne:

    If you did not contribute to SS during your period of state employment, and you applied for spousal benefits based on your husband’s SS record, you were affected by the Government Pension Offset (GPO) provision of the law and not because of the Windfall Elimination Provision (WEP). The WEP affects your own SS benefits and can reduce your receipt of SS benefits but not eliminate them. The GPO affects only spousal SS benefits and it can offset the entire amount of any spousal benefit for which you would otherwise qualify.

    Here is a link from the Social Security website that explains the GPO:
    https://www.ssa.gov/benefits/retirement/planner/gpo-calc.html

    by LS — July 10, 2020

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