I am 67 years old and over full retirement age. My recent benefit statement advised that when I applied I would receive $871.30 per month. I am a native born American but worked in Canada and can receive monies from the Canada Pension Plan also. I advised Social Security of this and the numbers they sent me say that when the Canadian Pension starts my benefit rate from Social Security will drop by 28% to $625.80. Then when I add my Canadian pension to that (adjusted for the exchange rate) it only goes up 9%! So by activating the Canadian pension I seem to be being penalized. How can that be? Shouldn't they at least balance out on both sides?

The Social Security literature said that once at full retirement age I could work and collect and there was no cap. Did I misinterpret the documents? Is there a cap I don't know about? I believed that the Canadian monies could simply be added on to my Social Security monies and that was the total I would collect plus I could still continue working part time if I wanted. Was that incorrect. Please advise me.

Sincerely,

David

Hi David,

There is no limit on the amount of earned income (i.e. wages and/or self-employment) that you can have once you reach full retirement age, so that's not the issue. The reason that your Canadian pension would likely lower your Social Security benefit rate is due to the windfall elimination provision (WEP). That provision changes the method of calculating Social Security retirement benefits for people who also receive a pension based on work they performed that was exempt from US Social Security taxes.

So, it's probable that the reduction in your benefit rate as a result of becoming entitled to a Canadian pension is correct. However, there is a WEP guarantee provision that limits the amount of the reduction to 50% of the gross amount of the non-covered pension. The full calculation of the guarantee provision is quite complex (https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605370), so it's difficult to know if the guarantee is applicable in your case, and if so, whether or not it was correctly applied by Social Security.

There are also other exceptions to WEP as well, so you may want to familiarize yourself with the provision by reading the following pamphlet: https://www.ssa.gov/pubs/EN-05-10045.pdf.

Best, Jerry