I'm a Federal Employee in the old full pension CSRS system. My question is about the WEP or Windfall Elimination Provision. I worked my entire Federal Career in CSRS, from 1978 to 2017, retiring in January. I have had a few part time jobs over the years and I have more that 40 quarters but not the required years of substantial earnings so I will be WEP'd.
The SS statement does not show the effects of the WEP. It says at the current earning rate, I should get $336 at 62, $472 at 66-10, and $592 at 70. My HR Retirement statement says I should get around $2491 (or about $207mo) at age 62 from SS but may be subject to the earnings test. My estimated pension is just under $70K gross.
Do these numbers sound right to you?
I plan to continue to work in the private sector and also start a sole proprietorship. Is there any provision that releases me from the future SS payroll taxes since I will already be retired on a non-SS system, or will I, and my future employers, continue to pay into SS even though I may not even get out what I pay into it?
Don't get me started on the GOP VAT for all instead of employer payroll taxes idea..... that will shaft retirees!
Yes, you must pay Social Security taxes on your future covered wages and self-employment profits, but they should help to increase your Social Security benefit amount. Your Social Security benefit is based on your best 35 years of inflation adjusted earnings, which in your case means that a lot of zero years are currently being averaged into the calculation. Replacing zero years with future earnings will increase your benefit amount accordingly. The higher your future earnings, the higher the increase.
The Social Security benefit statements are generally fairly accurate, but the reduced age 62 amount you were quoted by the HR department seems a bit high in relation to the estimates on the SS statement. If your full retirement age benefit (PIA) is $472 before the WEP reduction is applied, it would only be around $210 after WEP. That would make the reduced age 62 amount more like $150 per month, assuming you were born in 1959.
My guess is that your HR department is assuming a certain rate of inflation will occur between now and when you reach age 62, and Social Security rates will increase accordingly. Social Security's estimates do not factor in an assumed rate of inflation, so that could account for the difference. In any case, at this point all of the amounts you've been given are only estimates, and are partly based on certain assumptions. The final data needed to compute your actual SS benefit rates won't be available until the year you reach age 62.