# Pensions and WEP



## Uptosnuff (Aug 19, 2020)

Does anyone here have a pension and because of that your social security is affected by the Windfall Elimination Program (WEP)?  I work for a quasi-governmental company and I have been told my social security payments will be cut because of my pension.  I have looked on the SSA site and can't make heads or tails of how to calculate my decrease in social security.

I am considering making an appointment with someone from SSA to discuss it.  

If you are in this situation, how much of a cut did you experience?  My husband and I are trying to decide when to start taking SS.


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## Lethe200 (Aug 19, 2020)

The WEP calculations process was changed from the flat percentages originally set up. Now you must use the on-line WEP calculator on the SSA site. You'll need your printed Social Security statement in order to enter the line-by-line earned income figures for each year.

Just follow the step by step instructions: (WEP) Online Calculator

My spouse's SocSec falls under WEP. We're delaying his taking benefits until age 70 - partially as we don't need the money and partially because that helps "bump up" his future benefit a bit. 

Be aware that if your SocSec benefit falls under WEP, I don't believe you are eligible to take the standard "spouse's 50% benefit". My spouse would get more money IF he were allowed to take 50% of my SocSec, but our CFP firm advised us WEP does not allow the spousal benefit substitution.

HTH!


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## Don M. (Aug 19, 2020)

As I understand it, the WEP provision applies to people who worked for a company or organization that did NOT contribute to the SS trust fund.  

Insofar as When to start taking SS benefits....that is a real quandary for many.  If a person knew for sure how long they will live, the decision would be easy.  Sure, waiting until 70 gives a larger monthly benefit, but what if such an individual only lives a short time after signing up?   Personally, I believe in the old "bird in the hand" philosophy, and the wife and I both signed up as soon as we were eligible.  Looking at what I paid in over my working career, vs. what I've already received, and how much we will receive if we live as long as our parents did....SS may be the Best financial investment I've ever participated in.


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## OneEyedDiva (Aug 20, 2020)

I feel for those affected by the WEP. I worked for the municipal, then state government which blessedly were both under the same pension plan. Under this plan, I contributed to SS so am not affected by WEP.  Like @win231 I decided to take mine at 62. I had been retired for 11 years, so I was ready. The break even age for me is 78. I have already collected for 11 years...if I live to the break even age, it will be 16 years. But if I had started at 70 and only had 8 years to go, even though the benefit would be more, it wouldn't enough to make up for collecting for twice as long (and COLAs are not factored in). 
According to the *example* in the chart found in the linked article, if those amounts were what I'd receive at age 62 or age 70, I'd get $21,600 more by starting at 62. This article also mentions other factors to consider.
https://www.nerdwallet.com/blog/investing/take-social-security-benefits/


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## jujube (Aug 20, 2020)

The Spousal Equivalent is under WEP and only gets a small SS payment.  He retired from the Department of Defense with a good pension, thank goodness.


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## peppermint (Aug 20, 2020)

I worked in a School system....I decided to take mine at 62....I 'm retired for 13 years....


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## Uptosnuff (Aug 21, 2020)

Lethe200 said:


> The WEP calculations process was changed from the flat percentages originally set up. Now you must use the on-line WEP calculator on the SSA site. You'll need your printed Social Security statement in order to enter the line-by-line earned income figures for each year.
> 
> Just follow the step by step instructions: (WEP) Online Calculator
> 
> ...



Thank you for the link!  I used the calculator and I was shocked at how little I will be receiving.  I had paid into SS for years.  I thought I would still get a decent amount of SS.  But I have now worked at my current company for 20 years and it does not pay into SSA so I will fall under the WEP.  At least now I'm armed with a good estimate.  I'm still not sure when I will start claiming.  

My choices seem to be: 
A. take it at 62 for a miniscule amount, 
B. wait 'til 66.6 for a small amount or 
C. wait 'til 70 for an OK amount. 

Thank you for all the replies.  My thought before I did the calculator was to take it at 62.  But seeing how little it will be, I'm not so sure.


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## Uptosnuff (Aug 21, 2020)

OneEyedDiva said:


> I feel for those affected by the WEP. I worked for the municipal, then state government which blessedly were both under the same pension plan. Under this plan, I contributed to SS so am not affected by WEP.  Like @win231 I decided to take mine at 62. I had been retired for 11 years, so I was ready. The break even age for me is 78. I have already collected for 11 years...if I live to the break even age, it will be 16 years. But if I had started at 70 and only had 8 years to go, even though the benefit would be more, it wouldn't enough to make up for collecting for twice as long (and COLAs are not factored in).
> According to the *example* in the chart found in the linked article, if those amounts were what I'd receive at age 62 or age 70, I'd get $21,600 more by starting at 62. This article also mentions other factors to consider.
> https://www.nerdwallet.com/blog/investing/take-social-security-benefits/



Diva, you are lucky that the place you worked for contributed to SS.  So you get a pension plus decent SS, if I read your post right.  Nice.

I found out by using the calculator on the SS website that my benefits will be cut in half.  And the amount wasn't that great to start with.


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## OneEyedDiva (Aug 22, 2020)

Uptosnuff said:


> Diva, you are lucky that the place you worked for contributed to SS.  So you get a pension plus decent SS, if I read your post right.  Nice.
> 
> I found out by using the calculator on the SS website that my benefits will be cut in half.  And the amount wasn't that great to start with.


It's a shame that the calculation of your benefits showed such a huge cut Uptosnuff! Yes, I am blessed to get a pension and social security.


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## Lethe200 (Aug 23, 2020)

Don M. said:


> As I understand it, the WEP provision applies to people who worked for a company or organization that did NOT contribute to the SS trust fund.



In my spouse's case, his state agency participated in the Social Security system until 1984. At that time they decided to opt out and set up a separate retirement plan. He qualifies for SocSec because he had 40 quarters paid in, before the agency opted out.

I haven't run the actual calculations under the new WEP guidelines. But under the original process it was expressed in percentage reductions based on retirement income. His reduction in SocSec benefits would have been a full 80%. 

So waiting a few years and getting the 7-8% increase/yr is worth it. Especially since we don't need the money right now anyway.


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## OneEyedDiva (Aug 23, 2020)

@Lethe200 I was once a proponent of taking SS as early as possible at age 62. But now with this 23-24% cut across the board looming...and very likely to happen in 2033-2034, I've changed my tune. So I'm strongly suggesting to those who can wait, like you, to hold off to at least full retirement age.  I never thought I'd hear myself saying *that*!


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## Lethe200 (Aug 26, 2020)

Hi OneEyedDiva! I actually took my own SocSec at Full Retirement Age + 11 months, being older than my spouse. We have to pay income tax on 85% of it so there was no point in trying to make my own benefit larger.

But for Spouse, due to WEP, we figured it was worth his waiting to age 70, and our CFP ran the #s and confirmed it made sense*. We'll still have to pay income tax on his, too, however. We figure it'll pay for his Medicare premium, LOL.

* _One is always guessing at one's mortality when making the SocSec decision, of course!_


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## Ellen Marie (Aug 27, 2020)

I am an offset, which is worse than a windfall.   I have paid into social security for 20+ years.   My monthly ssa amount is $365.  It is only that much because I have continued to work since retirement.


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## Christopher (Aug 29, 2020)

Well, I'm going to wait until full retirement age (66y & 4m). That's another 2 years and 2 months. I will be affected by the WEP, and I hope they modify or repeal it. There's  some legislation pending, and hopefully it will be resolved.

It seems as if the WEP was designed to protect the system from people who have government pensions not covered by social security, who then work for the private sector a short time and receive a proportionately higher social security payment because the system only sees (and recognizes) a lower earnings record. Lower earners are given a higher social security payment. If you appear to be a lower earner (artificially) you are deemed to be receiving a "windfall." To eliminate this, the 1980s provision was enacted. The problem was that they never factored in the inverse situation: A lower wage earner for social security purposes who has 40 quarters but just 20 years of earnings (not 30) due to higher educational pursuits. Now earning a high salary that will yield a good government pension, but will subject the social security payment to "windfall" treatment. 

This stinks because the earlier earnings were secured in good faith.


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## Uptosnuff (Sep 7, 2020)

@Ellen Marie I have never heard of an offset.  What is that and how does it work?  Wow, your situation looks worse than mine.

I am not complaining, though it kind of sounds like it.   I will have a decent pension which is more than most people get any more.  But my SS will not be much more than yours, which was a shock.  Does an offset work anything like a WEP?  Is it because you have a pension or some other source of income to take the place of SS?


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## Uptosnuff (Sep 7, 2020)

@Christopher I think I will wait until full retirement to claim my benefit also, but for me that's another 5 1/2 years.  It's interesting that there's legislation pending on this but I don't really see it going anywhere.  Not with the situation SS is in now.  

_"This stinks because the earlier earnings were secured in good faith." _ Exactly!


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## Ellen Marie (Sep 8, 2020)

Uptosnuff said:


> @Ellen Marie I have never heard of an offset.  What is that and how does it work?  Wow, your situation looks worse than mine.
> 
> I am not complaining, though it kind of sounds like it.



Well, I am complaining to a point.  I paid into ssa full time for 10+ years.  Then, I worked for the government to draw a pension (26 years), I retired and I have worked at least half time since then (13 years) paying into ssa for 13 years.  However, to reclaim my ssa benefits with a government pension, I must earn, and pays ssa on, more than $22000 a year, which I don't.   So, I get 40% of my ssa benefit, and the government continues to keep 60% of my ssa eligibility.... for life.


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## Uptosnuff (Sep 8, 2020)

@Ellen Marie Yes, that does suck and I can see where you would be complaining.  You have worked a lot of years.

What I am concerned about is that I don't work for the government.  I work for a company.  And the jackass that is the president now obviously does not care about the retirees or the pension fund.  The pension fund continues to be less and less funded as time goes on.  It used to be 100% funded.  Now, it is about 55% funded.  I am really concerned about the company being sold off, the pension fund being raided and then where am I?  

I have seen that scenario happen many times before.  That is the trouble with pensions; they aren't always there for you.


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## Ellen Marie (Sep 8, 2020)

Go to Youtube and do a search for pension funds.   You will never sleep soundly again.


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