By Rusty Gloor, National Social Security Advisor at the AMAC Foundation, the non-profit arm of the Association of Mature American Citizens
Dear Rusty: I took early retirement at 20 years from the Louisiana public school system in 1996. Since then, I have continued to work in private schools (except for 2 years in public). I now have over 20 years in the Social Security system. Are they going to take money out of my tiny early LA retirement check or lower my Social Security check? Is it true I can continue working and draw Social Security? I have reached full retirement age – I am 68. Signed: State Retiree
Dear State Retiree: There are 27 US states (including Louisiana) which, to varying degrees, do not require state employees to contribute to the Federal Social Security program. Retirees in those states with a pension earned while not contributing to Social Security, and who still earn enough Social Security credits (from other work) to be eligible for Social Security benefits, are affected by a regulation known as the Windfall Elimination Provision (WEP), which reduces the amount of your Social Security payment. So, the answer to your question is yes, your Social Security benefit will be reduced as a result of your LA state pension and WEP (your LA retirement benefit won’t be affected).
The amount of the reduction to your Social Security benefit will depend upon the number of years of “significant” earnings you have contributing to the Social Security (SS) program. With 20 or fewer years of SS-covered earnings, you would incur the maximum WEP reduction, which is either a) 50% of your LA State pension amount, or b) the maximum WEP reduction for your “eligibility year” (the year you turned 62, which I believe was 2015). In the case of b), the maximum WEP reduction to your Social Security benefit would be $413/month.
Since you say you have “over 20 years” contributing to Social Security, be aware that the size of the WEP reduction to your SS will be smaller for each year over 20 that you have significant SS-covered earnings. For example, with 21 years of SS earnings your WEP reduction would be $371/month; with 25 years of SS contributions your WEP reduction would be $206/month; and with 30 years of SS contributions, WEP would no longer apply. As you can see, the WEP reduction to your SS benefit decreases proportionally with each year over 20 that you have significant earnings and contribute to Social Security, and WEP disappears with 30 years of significant SS earnings.
Be aware that WEP will not affect you until you are collecting both your LA state pension and your Social Security benefit, and that for each full year you continue to work and contribute to Social Security the WEP reduction will diminish. And since you’ve passed your full retirement age you can collect Social Security and work without your SS benefits being affected. But, in any case, you shouldn’t delay claiming your Social Security benefit past age 70 because that is when your SS benefit will reach maximum.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website amacfoundation.org/programs/social-security-advisory or email us at email@example.com.