The effective reduction to your Social Security benefits from the Windfall Elimination Provision changes based on your filing age. This is despite the well publicized ‘Maximum WEP penalty of $448 (for 2018).’
Check out this video where we walk step by step through the calculation process.
Summary of video:
In this video we discuss how the WEP penalty is subtracted from your benefit amount before reductions or increases for your filing age. This changes the effective penalty to an amount that is larger, or smaller, than the well-published $448 (for 2018). Simply put, the effective penalty is the amount of reduction or increase that an individual who is subject to the WEP would receive vs. an individual who is not subject to the WEP.
If you have a pension from work where you did not pay Social Security taxes, but qualified for SS benefits from other work, your SS benefits formula is NOT THE SAME AS IT IS FOR EVERYONE ELSE! Here’s how it is different…
Here's How To Calculate Your REAL Social Security Benefit
Social Security retirement benefits often make up a large portion of an individual’s retirement income. Throughout your lifetime, you can keep an eye on your projected retirement benefits on your annual Social Security statement or by looking at your online mySocialSecurity account (mySSA). It’s a great tool for making educated retirement planning decisions.
But what if your Social Security benefit’s estimate is incorrect by several hundred dollars per month? For some people, it is wrong. Even worse, they probably don’t know it is wrong. What an awful retirement surprise!
If you work for an employer who does not participate in Social Security but has their own pension instead, you probably know that your Social Security options can be complicated with tricky rules that only apply to teachers and other public servants. These rules include the Windfall Elimination Provision (WEP) and the Government Pension Offset.
Individuals often look for a way to soften the impact of these rules. Time and again I hear individuals wondering if they can sidestep these rules by simply taking their pension in a lump sum. After all, in just about every reference to these rules, the Social Security Administration (SSA) says that the rules apply to individuals with a pension from work where no Social Security taxes were paid.
So…if there’s no a ‘pension’ being paid, do the rules still apply?
They do, but with a few exceptions. For certain individuals, taking a pension out in a lump sum can be a valid method of sidestepping these rules. If this interests you, read on. The rules for when and how are complicated, and you don’t want to mess this up.
In several states, most school districts do not participate in Social Security. Instead, they have their own pension plan to which they contribute. But over time, a few school districts in these states have adopted agreements with the Social Security Administration which allows them to participate in both Social Security AND their own pension plan.
Over the past few years I’ve produced a lot of content that covers the complicated Social Security rules for educators and other public servants. Now, as my website has experienced massive growth, the content I’ve created can be hard to find. It occurred to me the other day that I should build a one-stop article that has links to some of my most read and requested material in this area.
This is the first, and most widely read article that broadly covers the topic of Social Security benefits for individuals with a non- covered pension (from a job where no SS tax was paid). This article has an overview of who is affected by the additional Social Security rules, the Windfall Elimination Provision and the Government Pension Offset.
Social Security for Educators is the hottest topic that I speak on. At these speaking events I usually get asked a lot of questions. Many of them are similar from place to place, but there is always one question that is asked every time. Why? Why do they pick on educators with these crazy Social Security rules?
In this video I’ll go into the thinking that went into setting up these weird rules.
Social Security is different for educators. It’s more complicated, and the rules aren’t always fair.
If you’re an educator, when your turn comes to file for Social Security benefits you may need to fight for what’s rightfully yours. But first, you need to understand the rules!
Thankfully, it’s not that hard. In this video I’ll help to simplify the rules.
Here are a few of the areas I’ll cover:
– How Your Teacher’s Pension Will Affect Your Benefit Amount
– The Windfall Elimination Provision
– The Government Pension Offset
– Can You Expect to Collect Spousal Benefits?
– Will You Be Eligible for Survivor Benefits?
– Strategies to Reduce the Impact of These Rules
This reader had a question about avoiding the Government Pension Offset for as long as possible.
Enjoyed your informative article (“Your Social Security and Retirement Benefits”) in the latest issue of ATPE News magazine.
I am an ex-serviceman (24-year career, US Army), currently a teacher, and will not be affected by the WEP when I retire and begin collecting my TRS pension.
I do have a question about the GPO: Can a spouse who is paying into TRS, not retired, and at FRA (under Social Security rules) apply for a spousal support benefit (under SS) when her husband who is at FRA applies for SS benefits?
I like this kind of question. It makes me think!
What I’m pretty sure you’re asking is this: If you are not receiving your pension from non-covered work, does the Government Pension Offset apply?
The simple answer is…NO!
If you are still working and your spouse has filed for benefits, you can file for and receive a Social Security benefit that is not affected by the Government Pension Offset. Enjoy it while it last. Once you retire, your Social Security benefit will get reduced by 2/3 of the amount of your TRS pension.
A note for all readers.
Over the past few years, I’ve found that most Social Security questions can be answered with an understanding of just six simple Social Security basics. I cover these basics in a 100% free report that you can download by clicking HERE.
If you still have questions after reading this report, send me an email. I can’t promise that I’ll respond individually, but I love interacting with my readers and answering Social Security questions! The questions and answers that’ll have priority are those that may benefit a wider audience. I’ll answer the question individually and then publish the Q&A on my blog. (Don’t worry, I’ll change up enough personal details so you’ll stay unknown.)
If you want to make sure I answer your question, I am still accepting individual consultations. You can click HERE for more information on booking a call with me.
A reader has a question about the suitability of switching from Social Security disability benefits to Social Security retirement benefits.
I was awarded Social Security disability before I turned 62. I and am now age 62 and am entitled to Social Security retirement benefits simultaneously with disability benefits. I’m thinking that the Social Security retirement benefits may yield me an overall larger family benefit (I have children at home).
Specifically, I am interested in how my Social Security full retirement age benefit may be calculated compared to how my disability benefit was calculated.