What Is The Most That WEP Can Reduce My Benefit Amount?

Apr 13 2017 - 7:45am

My WEP offset seems to be rising faster than my monthly SS benefit.
I am trying to decide to start taking benefits in 2017 or to wait until 2018.

Do you know the amount or where I can find the Maximum Monthly Amount my Benefit
May Be Reduced Because Of The Windfall Elimination Provision (WEP) for 2018?
Thank you, Tom

Hi Tom,

The most that the WEP formula can reduce a person's benefit amount is by 50% of the first 'bend point' that applies for their year of birth. A person's benefit rate is calculated based on 1 to 3 different percentage rates applied to their average indexed monthly earnings (AIME). Under the normal computation formula, a person receives 90% of the first tier of their AIME as part of their benefit rate (https://www.ssa.gov/pubs/EN-05-10070.pdf). But, under the WEP formula (https://www.ssa.gov/pubs/EN-05-10045.pdf), a person can receive as little as 40% of the first tier of their AIME. The percentages applied to the higher tiers of a person's AIME are the same under both the normal and WEP formulas, so 50% of the first tier is the maximum WEP 'loss'.

The tiers in the calculation formula are divided by bend points, that vary by year of birth. The first bend point for a person born in 1955 is $885, so the most that their full retirement age benefit rate (PIA) could be reduced under the WEP formula is $442.50 (i.e. .5 x $885). But, the actual dollar difference can vary somewhat depending on at what age the person starts drawing their benefits, and after the application of cost of living adjustments.

Bend points have already been established for years of birth up to 1955 (https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605900), but must be estimated for people born after 1955. The maximization software available on this website is programmed to handle all of the variables involved in a WEP calculation, so you may want to strongly consider using it to determine your best filing strategy.

Best, Jerry