Social Security

The Windfall Elimination Provision (WEP) reduces your Eligibility Year benefit amount before it is reduced or increased due to early retirement, delayed retirement credits, cost-of-living adjustments (COLA), or other factors. The following examples show how the WEP reduction changes when the Eligibility Year (ELY) benefit is affected by other factors.

• Retirement Examples: The monthly retirement benefits are increased or reduced based on your age after WEP reduces your Eligibility Year benefit.

  If you turn 62 in 2012 (ELY 2012) and you have 20 years of substantial earnings, WEP reduces your monthly benefit by $383.50.

  Your full retirement age is 66. If your full retirement benefit is $1,384, your Eligibility Year benefit after the WEP reduction would be $1,000.*

If You Choose Early Retirement

If you start getting retirement benefits the month you turn 62, you will get benefits before you reach full retirement age. Your monthly benefit is reduced to 75% because you will get benefits for 48 additional months.

Your age 62 retirement benefit is $750 ($1,000 x 75% = $750) per month. If your full retirement benefit had not been reduced by WEP, your age 62 retirement benefit would have been $1038. Early retirement changed the reduction for WEP from $383.50 to $288.

If You Choose Delayed Retirement

You decided to wait to age 70 to receive benefits so you could get Delayed Retirement Credits.

Your eligibility year is still 2012.

If your retirement benefits start after your full retirement age (66 years) the benefit increases 8% for each year before age 70 that you delay retirement. If your benefits start at age 70, you get credit for the 48 additional months when you did not get benefits and your monthly benefit will be 32% higher.

Your age 70 retirement benefit is $1,320 ($1,000 x 132% = $1,320). If your full retirement benefit had not been reduced by WEP, your age 70 retirement benefit would have been $1,826. Delaying retirement increased the reduction for WEP from $383.50 to $506.

^*Benefit amounts are rounded down to the nearest dollar.

• COLA Example: The annual cost-of-living adjustment (COLA) is added to your monthly benefit amount after WEP reduces your Eligibility Year benefit.

  When you became disabled in 2012 (ELY 2012) WEP reduced your $1,384 Eligibility Year benefit to $1,000^*.

  The following year, the 1.7% January, 2013 COLA increased your benefit by $17 ($1,000 x 1.7% = $17). If it were not reduced by WEP, your benefit amount would have increased by $23 ($1,384 x 1.7% = $23). The new benefit would have been $1,408 instead of $1,017. COLA increased the reduction for WEP from $384 to $390. ($1,407 - 1,017).

  ^*Benefit amounts are rounded down to the nearest dollar.