Some Americans Get Less Social Security Than Expected
Apr 17, 2013
Waxahachie, TX (Law Firm Newswire) April 16, 2013 – Some retirees with government pensions will get less social security than they may expect.
About one million Americans are affected by the Windfall Elimination Provision (WEP), which affects government workers on the local, state or federal level who were hired prior to 1984 and are eligible for a government pension.
“Retirees who are affected by the Windfall Elimination Provision need to be aware of what their Social Security benefits will be so that they can plan properly for their retirement,” said John Hale, a Dallas elder law attorney and estate planning attorney. “The provision can cause a large variation in benefits, so it is best to be prepared.”
The Windfall Elimination Provision is one of the results of a panel created by President Ronald Reagan to address the projected insolvency of the Social Security system. Because of longer life expectancies, Social Security benefits were being paid for a longer period than expected. In 1983, Congress adopted the recommendations of the panel and Reagan signed the Social Security Amendments into law. In addition to the WEP, the changes included raising the payroll tax, raising the retirement age gradually, taxing part of the Social Security benefits awarded to higher-income taxpayers, and requiring newly-hired federal workers and employees of nonprofit organizations to pay into the system.
The WEP changes the formula used to determine Social Security benefits for people who are also eligible for a government pension. Suppose an individual worked for a city department for a number of years and earned a full pension, then later worked in the private sector for a shorter time period. Without the WEP, Social Security would only have information about the individual’s private sector work and would assign a benefit based on that. The adjustment required by WEP takes the individual’s pension into account and adjusts the benefits downward. Some retirees may find that due to the WEP, their monthly benefits are cut in half.
A government pension can also affect spousal benefits and widow or widower benefits. For assistance determining your Social Security benefits and planning for retirement, it is best to consult with an experienced estate planning attorney and elder law attorney.
John Hale is a Dallas elder law attorney and Dallas estate planning lawyer with The Hale Law Firm. To learn more visit http://www.thehalelawfirm.com.
The Hale Law Firm
100 Executive Court, Suite 3
Waxahachie, TX 75165