Early Retirement/SS Questions

[Bideshi]

Is it October each year when they recalculate your benefits if you're drawing SS but still working? When would an increase show up on the benefit check?

[Jimrob1]

Originally Posted by MadManofBethesda

That's simply not true (and putting it all in caps don't make it so).

What you're referring to is the Windfall Elimination Provision (WEP) which reduces, but does not eliminate, a person's Social Security benefit if they do not have 30 years of substantial earnings under SS if they receive a public pension. I will try to keep this simple rather than go into all of the details, but suffice it to say that SSA uses a three-tiered formula, where the highest tier used to determine benefits is 90% of a portion of the average indexed monthly earnings (AIME). If someone in this situation only has 29 yrs of SS earnings instead of 30, then that first tier used will only be 85%. The first tier is reduced 5% for each year that a person lacks in "substantial coverage" down to 20 years. If the person has between 10-20 years of coverage, then that first tier will only be 40% instead of 90%. The remaining two tiers that are multiplied by the AIME are unchanged whatsoever.

In effect, WEP can reduce a high earner's Social Security benefit by several hundred dollars a month, but under no circumstance can it come close to eliminating it. This can be easily researched if you want more informaton.

(The Public Pension Offset by contrast, can completely eliminate the right to a spousal benefit, but that is a completely different issue.)

I can vouch for this information being correct and completely accurate. I just applied for SS Retirement 2 weeks ago. I am a Federal Retiree and because of my pension I fall under the Windfall Elimination Provision.

I just received my Award letter today and was pleasantly surprised. The reduction was not as bad as I thought it would be. I thought I would receive a much smaller SS check each month. So this letter was a nice surprise today. I had no idea SS was this quick in contacting people. Thankfully I had other jobs in life besides the FEDS and paid into SS thru the decades. Definitely helped in boosting the amount I will get starting in Jan 2012.

[Jellybean50]

Well - nothing 'wiped out' my SS, but my SSD almost wiped out my postal service pension

I had to take an early retirement at age 48 due to disability. I was finally awarded SSD two years later, and this reduced my postal pension, and i also have to pay back all the extra paid to me in those two years (in my pension). But i knew this was the way it would be - i couldnt work any more, so there was no choice.

With that said, my check has always been in my account (direct deposit) on time, and i dont have any taxes taken out of it - to answer a couple of your other, original questions.

[Escort Rider]

Originally Posted by Bideshi

Is it October each year when they recalculate your benefits if you're drawing SS but still working? When would an increase show up on the benefit check?

I'm sorry I don't know the answers to your questions, but I do know that an increase is not automatically forthcoming just because we are still working. If we already have 35 years of earnings on record, and if the current amount of earnings is not high enough to replace one of the previous 35 highest years (as indexed for inflation), then there will be no increase. For example, if we had 35 years of full-time work but we are now working part-time, there may be no increase.

In my case I still work part-time but I have a number of zeros for the 35 years, so almost any amount (replacing a zero) results in a slight increase. I do know that I have usually (but not always) received a letter about the increase and that frequently a retroactive amount was included in one payment to make up for any tardiness in recalculation, but I have not saved the letters so I cannot answer your questions (sorry).

If no one posts with an answer, you can do one of three things: Look around on the Social Security website (www.socialsecurity.gov), call Social Security, or go personally to an office. If I get around to the website and find an answer, of course I'll post it.