I’m 63 years old and a retired public school teacher. How can I determine my Social Security benefits if I currently have an STRS pension? It is my understanding that due to STRS, I will only receive a portion of my earned benefits.

Hi. It sounds like your Social Security retirement benefit rate will likely be reduced due to the Windfall Elimination Provision (WEP). WEP can cause a person's Social Security retirement or disability benefit rate to be lowered if they receive a pension that's based on their earnings that weren't subject to Social Security taxes (https://www.ssa.gov/pubs/EN-05-10045.pdf). Calculating a person's benefit rate with or without a WEP reduction is complex, so you may want to strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to do the calculations.

Here's how it works. Social Security calculates a person's Social Security retirement benefit rate based on their average monthly earnings during their highest 35 years of Social Security covered wage-indexed earnings. The average earnings are then separated into three tiers based on the year the person reaches age 62, and a different percentage return is applied to each tier. The normal percentage return on the first tier is 90%, the percentage return on the second tier is 32%, and the percentage return on third tier is 15%. The resulting sum of the three tiers is determines the person's primary insurance amount (PIA), which is the amount they would receive if they start drawing benefits at full retirement age (FRA).

For example, for a worker who turns 62 in 2022, the first $1,024 of their average monthly earnings is multiplied by 90%; earnings between $1,024 and $6,172 are multiplied by 32%; and the balance by 15%. The sum of the three amounts equals the PIA, which is then decreased or increased depending on whether the worker starts benefits before or after full retirement age (FRA).

The Windfall Elimination Provision (WEP) modifies the normal Social Security benefit formula by reducing the percentage return on the first tier from 90% to as low as 40%. For a person reaching age 62 in 2022, that can result in a PIA reduction of as much as $512 (i.e. $1024 x 50%). However, there is a WEP guarantee provision that limits the amount that a person's benefit can be reduced by WEP to no more than half of the person's non-covered pension amount.

Our software is programmed to handle all of the above described calculations in order to give you an accurate estimate of your benefit rate. The software would also allow you to fully compare and analyze all of your filing options so that you can determine your best strategy for maximizing your benefits.

Best, Jerry