How Will WEP Affect Our Benefits?

Dec 2 2016 - 12:30pm

3 years ago, my husband started in a teaching position that does not pay in to social security. He has spent the last 22 years paying into SS and has achieved his 40 credits. The SS website states that, if he retired now, he would get $1150.00 per month. I understand that the max WEP is $428.00 bringing his benefit down to $722. My questions are:
1) He continues to work a second job that does still pay in to social security ($15,000-$20.000 per year). This will likely continue for 5 more years. How would that affect the WEP figure?
2) If he dies, Social Security states that the spousal benefit would be $1428.00. Is that also reduced by the WEP? I am assuming I would still get 100% of his pension as he has chosen 100% spousal benefit for this.

Hi,

If your husband receives a pension based on his work that is exempt from Social Security taxes, the Windfall Elimination Provision (WEP) would likely lower his Social Security benefit as well your spousal benefit, if you qualify, while he is living. However, if he has between 21& 30 years of 'substantial earnings' on which he paid Social Security taxes, the WEP reduction would be lessened (https://www.ssa.gov/pubs/EN-05-10045.pdf). And, if he gets to 30 years of substantial covered earnings, both his own benefit rate and your potential spousal benefits would then be exempt from WEP.

The level of yearly earnings that is considered 'substantial' has varied over the years, and is currently set at $22,050. So, if your husband is earning between $15 & 20K per year that is subject to Social Security taxes, it won't help in lessening the impact of WEP. However, since Social Security retirement benefits are calculated based on a person's best 35 years of inflation adjusted earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf), if your husband only has 22 years of Social Security covered earnings, any future covered earnings that he has should increase his benefit rate.

Regardless of the number of 'substantial earnings' years that a worker has, survivor benefits are not subject to WEP. So, if your husband dies before you and you become entitled to benefits on his record, WEP will not reduce your widow's benefits. And, if you receive a survivor pension based on his non-covered work, it would not affect your Social Security benefits.

BTW, the maximization software available on this website is programmed to consider the effects of WEP, so you may want to consider running it before making any filing decisions.

Best, Jerry