Q & A
Ask Rusty – I’m Already Collecting Social Security – How Will My WEP Reduction be Calculated?
Dear Rusty: I don’t understand exactly how the Windfall Elimination Provision (WEP) works for my situation. I turned 62 in 2017 and am currently still working in a “non-covered” job, not paying into Social Security, but from which I will get a government pension when I retire. I began collecting Social Security at my full retirement age in 2021 and am now collecting $1507 per month thanks to the cost of living adjustments since I started. Will my Social Security benefit be reduced by $587 if I retire this year? Signed: Confused by WEP
Dear Confused: You’re certainly not alone to be confused by WEP, and your situation is somewhat special because you started your SS benefits before taking your “non-covered” government pension. And, unfortunately, most tools and charts which suggest how much WEP will reduce your Social Security benefit don’t accommodate that nuance very well.
In your case, when you claimed Social Security at your full retirement age (FRA), you were awarded the full benefit you were entitled to, unreduced by WEP because you were not yet collecting your non-covered government pension. You were able to collect your full SS amount and receive each year’s full cost of living adjustments (COLA) to those higher amounts. What actually happens is that each person’s Primary Insurance Amount (PIA) is first determined at age 62, and Social Security applies an annually awarded COLA to their PIA (primary insurance amount), even if they’re not yet receiving benefits. You received your full PIA, including COLA, because you claimed at your full retirement age. But when you start collecting your pension from your non-covered government job, the Windfall Elimination Provision (WEP) will kick in and reduce your Social Security benefit.
The amount of WEP reduction depends on how many years you had contributed to Social Security from “substantial” earnings but, with 20 or fewer years, the maximum WEP reduction is determined by the year you turn 62 and doesn’t change. Since you turned 62 in 2017, your maximum WEP reduction, according to Social Security’s process, is $442.50 – lower than the $587 you suspect.
Nevertheless, due to the way Social Security calculates the WEP reduction, the reduction from your current amount will seem larger than the WEP maximum. And that’s because of the way Social Security applies the WEP reduction to your benefit. They start by first removing all cost-of-living increases since you were 62 from your primary insurance amount (PIA). They will then take your PIA (sans COLA) and subtract $442.50 (if you have more than 20 years of substantial SS-covered earnings they will subtract less), and then they will reapply all the cost-of-living increases since you were 62 to your WEP-reduced PIA. What just happened, in effect, is that your previous (pre-WEP) COLA increases were removed from your PIA, and those same COLA percentages were reapplied to your smaller WEP-reduced PIA, to arrive at your new monthly benefit amount under the Windfall Elimination Provision. And that new amount will be lower than your previous SS benefit amount by more than the published maximum WEP reduction for the year you turned 62.
A word of caution: Timely notification to Social Security of your non-covered pension is very important. As soon as you receive your non-covered pension award letter, deliver it to your local Social Security office and request a WEP recalculation of your SS retirement benefit. The WEP recalculation will likely take months to process, during which time you will continue to receive your higher non-WEP SS benefit. That means you will be overpaid for the period between when your non-covered pension started and the month your new WEP SS payment began, and that overpayment must be refunded to Social Security.
If WEP is repealed, will it be retroactive, or only work for people who have yet to apply for SSI?
Annie:
Section 4 of the House bill (H.R. 82) and the Senate bill (S. 597) both contain this wording: “The amendments made by this Act shall apply with respect to monthly insurance benefits payable under title II of the Social Security Act for months after December 2023. Notwithstanding section 215(f) of the Social Security Act, the Commissioner of Social Security shall adjust primary insurance amounts to the extent necessary to take into account the amendments made by section 3.” This would imply that the change in benefit calculations, if passed, would not be retroactive and would commence with Social Security benefits claimed in 2024 and thereafter.
If you have further questions, please contact our Social Security Advisory Service at 888-750-2622.
Gerry Hafer
Certified Social Security Advisor
The AMAC Foundation
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Thank you.
Thank you for this explanation. I’ve been trying to fully understand this WEP Chart published by SS https://www-origin.ssa.gov/benefits/retirement/planner/wep.html for quite sometime. You put forth the first understandable explanation I’ve ever encountered.
I am subject to the WEP.
I turned 62 in 2018 and in 2018 I also had 21 years of SS’s “Substantial Earnings” under my belt from other work that did pay into SS. I’ve continued working at job, that pays into SS since then, and plan to claim SS in 2026 at age 70 (when delayed credits end) at which time I’ll have 29 years of Substantial Earnings completed, I now understand they’ll be calculating my SS benefit on my age 62 PIA less my 2018, 21 years of Substantial earnings, WEP penalty of $402.80.
I’m wondering if I continued working (while collecting SS) a few months into 2027… enough to make the Substantial Earnings limit for 2027 and acquiring the holy grail of 30 years of Substantial Earnings, if SS would make an entire re-computation my benefits thereafter without any of the WEP penalty involved.
Hi Dave,
Glad we were able to clear up the WEP rules for you. And yes, if you continue working and contributing to Social Security from substantial earnings, you can notify SS and request they recalculate your WEP reduction because you now have 30 years of contributions. It may take them a while into 2027 to process your request and to get you fully exempt from WEP, but your benefit change will be made retroactive to the beginning of the year you became exempt.
Note you will need to contact them to cause the recalculation to occur.
Russell Gloor
Certified Social Security Advisor
The AMAC Foundation
Excellent information! Thank you so much! To say the least Social Security is terribly difficult to calculate. i am impacted by WEP and wish so much that there had been this type of information available in the past when I was trying to make my decisions about this very important calculation.
Oh my goodness, Rusty! Thank you for this information. I did not know that the amount of WEP was set, and stayed, based on the year that you turned 62 and not the going rate when you claimed benefits. In fact, I thought that if I started collecting benefits at my FRA (66, 8 months – later this year) that my WEP reduction would go up every year. This is yet another confusing part of WEP. Is there somewhere on the Social Security website that it states this, so that I’ll have it in hand when I decide to meet with them?