Ask the Expert: Social Security and the WEP
You've explained the advantages of delaying Social Security past full retirement age (FRA). I'm subject to the Windfall Elimination Provision (WEP), which will reduce my Social Security benefit. Would I gain anything from delaying my application for Social Security, as people not subject to WEP do?
Yes.
The WEP applies to people receiving pensions from jobs in which they didn't pay Social Security taxes (typically government jobs), who qualify for Social Security based on taxes they paid when working in other jobs. If you’re subject to WEP, a special formula reduces your Social Security benefit, because the standard formula for calculating that benefit would give you an unfair advantage over Social Security beneficiaries who don’t receive government pensions.
But the WEP reduction is applied is to your benefit before the later calculations that can increase it, like delayed retirement credits and cost-of-living adjustments (called COLA). The upshot: You gain by postponing your application.
Let's say you turned 62 this year. If you paid into Social Security for 20 years, the maximum WEP reduction in your FRA benefit is $512, or 50% of your monthly government pension, whichever is smaller.
Let’s say your FRA benefit at FRA — age 67 — would be $1,396, and the WEP reduces it by $512, to $884.
Like everyone else, you get a smaller benefit if you apply early. If you take it at 67, you’ll get $884. If you take it at 62, your $884 is reduced to $618 a month. And if you wait until you're 70, you’ll receive four years of 8% annual delayed-retirement credits that will boost your monthly check to $1,096, (plus COLA).
The bottom line
Even when the Windfall Elimination Provision reduces your Social Security benefit, you'll get a bigger monthly check if you delay applying for it.
More information
TO ASK THE EXPERT Send questions to act2@newsday.com. Include your name, address and phone numbers. Questions can be answered only in this column. Advice is offered as general guidance. Check with your own consultants for your specific needs.
