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Reagan, republican control senate, democratic control congress =

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Some U.S. workers who have paid into the Social Security system are in for a rude awakening when the checks start coming: Their benefits could be chopped by up to $413 per month without warning.

That is the maximum potential cut for 2015 stemming from the Windfall Elimination Provision, a little-understood rule that was signed into law in 1983 to prevent double-dipping from Social Security and public-sector pensions. A sister rule called the Government Pension Offset can result in even sharper cuts to spousal and survivor benefits.

WEP affected about 1.5 million Social Security beneficiaries in 2012, and another 568,000 were hit by the GPO, according to the U.S. Social Security Administration (SSA). Most of those affected are teachers and employees of state and local government.

These two safeguards often come as big news to retirees because the SSA gives them no advance warning, and until 2005, no law required that affected employees be informed by their employers. Even now, the law only requires employers to inform new workers of the possible impact on Social Security benefits earned in other jobs.

Many retirees perceive the two rules as grossly unfair. Opponents have been pushing for repeal, so far to no effect.


To understand the issue, you need to understand how Social Security benefits are distributed across the wealth spectrum of wage-earners.

The program uses a progressive formula that aims to return the highest amount to the lowest-earning workers - the same idea that drives our system of income tax brackets.

It is a complex formula, but here is the upshot: Without the WEP, a worker who had just 20 years of employment covered by Social Security, rather than 30, would be in position to get a much higher return because of those brackets.

Where is the double dip? The years in a job covered by a pension instead of Social Security.

If you had worked in non-covered employment for a significant portion of your career, there should be a shared burden between the pension you receive from that period of your employment and from Social Security in providing your benefit,” says SSA Chief Actuary Stephen C. Goss. “Just because a person worked only a portion of their career with Social Security-covered employment, they should not be benefiting by getting a higher rate of return.”

If you are already receiving a qualifying pension when you file for Social Security, then the WEP formula kicks in immediately. The SSA asks a question about non-covered pensions when you file for benefits, and it also has access to the Internal Revenue Service Form 1099-R, which shows income from pensions and other retirement income.

f you have 30 years of Social Security-covered employment, no WEP is applied. From 30 to 20 years, a sliding WEP scale is applied. Below 20 years, your benefit would drop even more. (For more information, see

How does this affect your checks? The SSA offers this example: A person whose annual Social Security statement projects a $1,400 monthly benefit could get just $1,000, due to the WEP.

Your maximum loss is set at 50 percent of whatever you receive from your separate pension, so if that is relatively small, the WEP effect will be minimal.

You can still earn credits for delayed filing, and you will still get Social Security's annual cost-of-living adjustment for inflation, but the WEP will still affect your initial benefit.

The WEP formula also affects spousal and dependent benefits during your lifetime. However, if your spouse receives a survivor benefit after your death, it is reset to the original amount.

Can you do anything to avoid getting whacked by WEP? Working longer in a Social Security-covered job before retiring might help. Remember, you are immune to the provision if you have 30 years of what Social Security defines as "substantial earnings" in covered work. That amounts to $22,050 for 2015.

So if you have 25 years, try to work another five, says Jim Blankenship, a financial planner who specializes in Social Security benefits. "That’s money in your pocket.”


Nothing new here. My wife has a 77k a year public pension from teaching. I had her working in my business for thirty years paying her minimum quarterly amounts to qualify for social security benefits for our children had she died when the kids were younger. She should be able to get about 700 bucks social security, but because of her pension she gets 138 bucks a month. However, the worse part is when I die, my entire survivor's benefit should go to my wife, but every dime of my social security will be extinguished when I die in the not too distant future. So, I took early retirement at 62, fully knowing that the money I paid in will never be paid out, and the money we paid in for my wife will never be paid out. I am really ok with this because we can fix social security only by increasing the earning ceiling from about 115k to 250k, but those people will also never get what they paid in.......I have been blessed in my life with opportunity, freedom, great community, incredible friends and family and the least the two of us can do is make sure people who have not been blessed as we have get benefits.......yea....I will leave over a hundred thousand dollars in the system, and my wife probably twenty five thousand.....but that is why they call them progressive taxes. We need to fix ss by a simple solution....increase the earning threshold.



You can't qualify for SS disability?

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