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Lane
Lane, JD,CFP, MBA, CRPS
Category: Social Security
Satisfied Customers: 10105
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial, Social Security & Tax advice since 1986
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I'm due to retire in 2weeks time at the age of 66. I have a

Customer Question

Hello,
I'm due to retire in 2weeks time at the age of 66. I have a WEP question:
My SS benefit is estimated to be $1721/month, at my retirement age of 66. If I also have $548/month National Insurance retirement benefit from the United Kingdom. How much my SS benefit is reduced based on the WEP factor?
Thank you
Submitted: 3 months ago.
Category: Social Security
Expert:  Lane replied 3 months ago.

Hi. My name's Lane. I can help here.

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Likely the reason you're having trouble her eis that the WEP if a fairly complicated formula, and we need more that just what you expected benefit is to do the calculation. we need yhour AIME (Average Indexed Monthly earnings)

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Just as a frame of reference, for the GPO (the Government Pension offset) the reduction to spousal and survivor benefits, the formula is simple and IS dependent on how much your non Social Security pansion would be. SSA reduces your Social Security benefits by two-thirds of your non-social security pension. In other words, if you get a monthly National survivor benefit of $600, two-thirds of that, or $400, must be deducted from your Social Security benefits. So, if you’re eligible for a $500 spouses, widows or widowers benefit from Social Security, you’ll get $100 a month from Social Security ($500 – $400 = $100).

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With WEP, we need your Average Indexed Monthly Earnings (part of the computation in getting TO your benefit.) We also need how many years you had under the Social Security system. (if you have 30 years in the social scdurity system, by the way, there IS no reduction from the WEP)

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Social Security is calculated by replacing 90% of the first $856/month (in 2016) of AIME, plus 32% of the next $4,301/month of AIME (up to $5,157 of total AIME), plus 15% of any remaining income above $5,157/month of AIME. The last 15% tier applies up to the maximum amount of earnings that can ever be considered for Social Security, which in 2016 is $9,875/month (The Social Security wage base)

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What the WEP does is reduce that 90% factor to 40% (for those who have less than 20 years in the system.

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For those with between 21 and 29 years, the 90% factor is reduced by 45% at 21 years to 85% in 29 years.

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And again, for those with 30 years in the system, there IS no reduction under WEP.

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It's almost impossiblw with know your AIME to project the number .... HOWEVER this calculator can get you very close, if you know your year earnings while working under social security:

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https://www.ssa.gov/planners/retire/anyPiaWepjs04.html

Customer: replied 3 months ago.
Here is a copy of my SS statement.
Expert:  Lane replied 3 months ago.

$1433 assuming that you did not work in 2016

Expert:  Lane replied 3 months ago.

Do you have a 2016 number for me to add?

Expert:  Lane replied 3 months ago.

OKI, I still don't see you coming back into the chat ... and I estimated 2016 at at 70K and that did not bring up the benefit

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Again, All I did was enter your birthday and your earnings into the calcualtor here: https://www.ssa.gov/planners/retire/anyPiaWepjs04.html

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

Otherwise I’m working for no crediting at all here

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Thank you!

Lane

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

Customer: replied 3 months ago.
Sorry, I had to go a way from my computer. I have no 2016 earnings. I wonder how accurate is your calculation. Did you use the actual SS program or the estimate? Can you give me a range: i.e $1433+/-?
Expert:  Lane replied 3 months ago.

Yes, again, I just used the calculator here: https://www.ssa.gov/planners/retire/anyPiaWepjs04.html

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you can go there and dump in your earnings and the amount of the other pension and double check .. only takes a mintue

Customer: replied 3 months ago.
I have already done so days ago and ended up with $1431. But was informed by the SS admin. the software that does the accurate calculation is far more complicated. My question is how close the $1433 is the real no? so that when I go to the SS office, I have some knowledge of my entitlements
Expert:  Lane replied 3 months ago.

Why didn't you tell me that?

Customer: replied 3 months ago.
Still, how close is your (my figure(s) to the actual nos. worked by the SS admin.? In your experience as a SS attorney, this should be easy to predict, or is it?
Expert:  Lane replied 3 months ago.

You're asking for a calculation that is outside the scope of this forum. I bill out to clients at 150 to 250 per hour depending on the complexity of the work.

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This site is designed for fairly straightforward, or point you in the right direction, kinds of answers. I hesitated taking my time to do data entry work, but did so as an effort of good faith, only to have you tell me (AFTGER I had already shown you the site and you had the opportunity to tell me before wasting my time) that you had already done it.

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I'll make an offer for what's called additional services here, we can share contact information and then talk about doing the project.

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But what I'll need to pull is the index used for each year, get the bend point numbers for each year, get to an AIME number, and tghen apply the formula I showed you above.

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That's outside the scope of this question (at this price).

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Let me know where you'd like to go from here.

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Expert:  Lane replied 3 months ago.

I think I just answered your question.

Expert:  Lane replied 3 months ago.

In terms of an estimate? It's likely close, given that you are below 20 years in the system.

Expert:  Lane replied 3 months ago.

In the event that you didn't see my post above ... let me past that here ... also understand that AIME is not a published number... AND that the index that they use to index the earnings is not published either.,,, but given that:

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With WEP, we need your Average Indexed Monthly Earnings (part of the computation in getting TO your benefit.) We also need how many years you had under the Social Security system. (if you have 30 years in the social scdurity system, by the way, there IS no reduction from the WEP)

...

Social Security is calculated by replacing 90% of the first $856/month (in 2016) of AIME, plus 32% of the next $4,301/month of AIME (up to $5,157 of total AIME), plus 15% of any remaining income above $5,157/month of AIME. The last 15% tier applies up to the maximum amount of earnings that can ever be considered for Social Security, which in 2016 is $9,875/month (The Social Security wage base)

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What the WEP does is reduce that 90% factor to 40% (for those who have less than 20 years in the system.

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For those with between 21 and 29 years, the 90% factor is reduced by 45% at 21 years to 85% in 29 years.

Expert:  Lane replied 3 months ago.

So as you can see ... this is not rocket science, just time consuming

Customer: replied 3 months ago.
thank you. i think we are done here.
Expert:  Lane replied 3 months ago.

Again, be glad to do the work, but not at this price

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Also would appreciate a positive rating (use the stars across the top of your screen) or I'm working for no crediting at all here.

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I Do believe that you now have what you need to calculate this for yourself - you'll just have to do some legwork on the inflation rate used from year to year... If I come across a table I'll post it here

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Let me know about the offer I ccan likely get this work doen in less than ab hour. My charge for that would be 150

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Have clients coming into my ofice to sign paperwork so I won't be checking back in for an hour or so

Expert:  Lane replied 3 months ago.

Hi Azmi ... just checking back in.

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You can see a couple of examples of the AIME calculation here: https://www.ssa.gov/OACT/ProgData/retirebenefit1.html

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And, again, once that's done, the AIME must be factored by the reduction of the 90% factor to 40% (WEP adjustment for those with less that 20 years in the system).

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I have family obligations this evening... but if you'll give me until tomorrow, I'll run the numbers for you in a way that I think will help to ilustrate what's goin on.

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Lane

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Expert:  Lane replied 3 months ago.

OK here you go. Note that my PIA checks (within $3). I think this will help you see how things work.

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Also note that the result is 1316

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I'm also going to make what's called an additional services offer here in the event that you'd like to discuss.

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If not, I'd really appreciate a positive rating (by using those stars or faces on your screen). Otherwise I will not be credited for the work.

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Lane

Expert:  Lane replied 3 months ago.

Sorry, [Azmi]

Expert:  Lane replied 3 months ago.

Hi Azmi - Just checking back in ... Did you see my work?

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I put together a spreadsheet that shows how this really works (the essence of how this applies to you is to reduce the 90% component of AIME to 40%)

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… I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

Otherwise I’m working for nothing at all here

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Thank you!

Lane

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