Hello,
We are CA residents, married filing jointly. I am retired from a local government job, and will be subject to SS WEP. I am currently drawing a pension, and thinking of taking SS next year at 62yo. My SS benefit will be reduced by about half, because of WEP offset. If I work part time, how much more will SS reduce my benefits? Should we take SS as soon as possible?
My wife is 63 and thinking of starting to draw SS now. She still works part time, how much can she earn while drawing SS without a reduction in future SS wages?
Thanks
You have two different items affecting your social security:
Social Security Windfall Elimination Provision: https://www.ssa.gov/pubs/EN-05-10045.pdf
SS WEP will reduce your income unless you qualify for some of the exceptions on the bottom of page 1 in the section on Some Exceptions. If you do not qualify, which based on your question it sounds like you may not, then you will have the reduction. I believe you have figured that out to about 50%.
In addition, if you keep working Social Security can also reduce your payment until you reach your full retirement age. If you were born between 1/2/1959 and 1/1/1960 full retirement is 66 years and 10 months. For 2021 the reduction is $1 from your benefits for each $2 you earn above $18,960. This amount will change on the year that you reach full retirement age to $1 from every $3 you earn above $50,520. These amounts will change for future years, so please look up the exact amount for the year you retiring and when you were born. Here is a good resource for this year: https://www.ssa.gov/pubs/EN-05-10069.pdf
For California a good reference for 2020 as to how things are taxed and if you have a basis in your IRA or pension can be found at: https://www.ftb.ca.gov/forms/2020/2020-1005-publication.pdf
As to whether or not to take Social Security as soon as possible, will depend on your financial situation. It would be best to sit down with a financial advisor to evaluate the specifics of your particular situation, who can see your entire situation.
The Social Security Administration has a great set of tools to help you understand the reductions until you reach full retirement age. They can be accessed either at your local Social Security office or at: https://www.ssa.gov/benefits/retirement/planner/agereduction.html
Thinking about retiring is a lot of work! Here are some resources that I hope are useful to help you sort through all this:
WEP information and substantial earnings tables
How earnings affect the amount of your Social Security benefits
You have two different items affecting your social security:
Social Security Windfall Elimination Provision: https://www.ssa.gov/pubs/EN-05-10045.pdf
SS WEP will reduce your income unless you qualify for some of the exceptions on the bottom of page 1 in the section on Some Exceptions. If you do not qualify, which based on your question it sounds like you may not, then you will have the reduction. I believe you have figured that out to about 50%.
In addition, if you keep working Social Security can also reduce your payment until you reach your full retirement age. If you were born between 1/2/1959 and 1/1/1960 full retirement is 66 years and 10 months. For 2021 the reduction is $1 from your benefits for each $2 you earn above $18,960. This amount will change on the year that you reach full retirement age to $1 from every $3 you earn above $50,520. These amounts will change for future years, so please look up the exact amount for the year you retiring and when you were born. Here is a good resource for this year: https://www.ssa.gov/pubs/EN-05-10069.pdf
For California a good reference for 2020 as to how things are taxed and if you have a basis in your IRA or pension can be found at: https://www.ftb.ca.gov/forms/2020/2020-1005-publication.pdf
As to whether or not to take Social Security as soon as possible, will depend on your financial situation. It would be best to sit down with a financial advisor to evaluate the specifics of your particular situation, who can see your entire situation.
The Social Security Administration has a great set of tools to help you understand the reductions until you reach full retirement age. They can be accessed either at your local Social Security office or at: https://www.ssa.gov/benefits/retirement/planner/agereduction.html