Liz Weston: Confused About Social Security Windfall Elimination Provision? Here’s an explanation – Community News
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Liz Weston: Confused About Social Security Windfall Elimination Provision? Here’s an explanation

Dear Liz: I was referred to an answer you wrote in 2017 explaining the Social Security windfall elimination provision. It was the clearest explanation I’ve seen. I am receiving a government pension and a reduced social security check from the provision and I am well where it is now, thanks to your post.

Answer: Many people are understandably upset that their Social Security benefits are reduced when they receive a pension from a job that has not paid into the Social Security system. Understanding why this happens can help. Here’s a reprint of the question and answer from 2017:

Dear Liz: I am a public school teacher and plan to retire with 25 years of service. I had previously worked and paid into Social Security for about 20 years. My husband has been paying Social Security for over 30 years. Will I be fined for not paying Social Security taxes while I was teaching? If my wife dies before me, will I get a survivor benefit, or will the Elimination of Windfall Act take that away? It’s so confusing!

Answer: It’s confusing, but you need to understand that the rules about eliminating windfall gains (along with a related provision, the government pension compensation) are not intended to deprive you of benefits that others receive. Instead, the rules are designed so that people who receive state pensions — which are typically more generous than Social Security — don’t get significantly more money from Social Security than those who have paid the system their entire working lives.

Here’s how that can happen.

Social security benefits are progressive, meaning they are designed to replace a higher percentage of a lower earner’s income than that of a higher earner. If you don’t pay the system for many years — because you have a job that provides a government pension instead — your annual Social Security income would be reported as zero in those years. Social Security is based on your 35 highest earning years, so all those zeros would make it seem like you were earning a lower (often much lower) lifetime income than you actually did.

Without any adjustments, you’d end up with a bigger Social Security check than someone who made the same income in the private sector and paid a lot more in Social Security taxes. It was that inequality that caused Congress to create the provision for eliminating windfall gains several decades ago.

People who earn state pensions can also receive significantly more money if a spouse dies. If a couple receives two Social Security checks, the surviving spouse gets the larger of the two when a spouse dies. The household does not continue to receive both checks.

Without the government franchise, someone like you would receive both a pension and a full survivor’s check. Again, that could leave you significantly better off than someone who would have paid more into the system.

Liz Weston, certified financial planner, is a personal finance columnist for: NerdWallet. Inquiries can be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact Us” form at