By Rhonda Romero and Rachel Brauner
There is a lot of confusion surrounding the Social Security Administration’s (SSA) Windfall Elimination Provision (WEP) and whether it goes into effect when you are collecting military retirement and/or Veterans Affairs (VA) disability.
WEP only goes into effect for retirement benefits. You may be eligible for a pension based on the work you did for a federal, state, or local government, nonprofit organization, or in another country. If you did not pay Social Security taxes on your earnings, this pension can affect the amount of Social Security benefits you receive. This reduction is referred to as WEP.
WEP is a rule of SSA that affects individuals who are eligible for both a pension from a job that did not pay Social Security taxes and Social Security benefits from other employment.
The WEP is designed to adjust the Social Security benefit of individuals who have earned a pension from a job that did not pay Social Security taxes, such as government employees, and who also have enough Social Security credits from other jobs to qualify for Social Security benefits.
The WEP modifies the formula used to calculate Social Security benefits for those individuals, resulting in a lower Social Security benefit than they would receive without the WEP. It applies only to the Social Security benefit earned through the individual’s own work history and does not affect spousal or survivor benefits.
The purpose of the WEP is to ensure that individuals who receive a pension from a non-Social Security-covered job and Social Security benefits are not unfairly advantaged over individuals who only receive Social Security benefits.
If your agency was paying into SSA retirement during your employment, it would not affect your benefits. If you decide to start retirement benefits the month you turn 62, you will get benefits before you reach full retirement age. SSA reduces your monthly benefit to 70% because you will get benefits for 60 additional months.
If you decide to wait until age 70 to receive benefits you can get Delayed Retirement Credits.
To learn more, check out the Benefits Planner for WEP.
(iStockphoto 1258280070, fizkes)