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 am 57 years old, was born in the UK, and since 1988 have worked in the US. I have always paid US taxes and Social Security. For the last 20 years, my annual income has typically been well north of $100K. In recent years I have made voluntary payments to the UK National Insurance system looking to claim a retirement benefit from the UK as well as from the US. My concern is that if I claim the UK benefit, this will affect my US Social Security claim. Any insight you can share will be appreciated. Signed: Worried
Dear Worried: If you have 30 or more years of U.S. employment where you paid into Social Security via payroll taxes on “substantial” earnings, your U.K. pension will not affect your U.S. Social Security benefit when you claim it. Social Security’s definition of “substantial” earnings is different for each year but, generally, if you worked full time in the U.S. and paid into Social Security via payroll taxes since 1988, the so-called Windfall Elimination Provision (WEP) won’t affect your US Social Security benefits.
Here is a link to Social Security’s WEP definition which includes a table of “substantial” earnings needed to count for WEP purposes: www.ssa.gov/pubs/EN-05-10045.pdf. The document at this link also describes how WEP works if you have less than 30 years of substantial U.S. earnings. With less than 30 years of substantial earnings on which you paid into Social Security your U.S. benefit will be reduced due to your U.K. pension. The amount of reduction would depend upon how many years of substantial SS-covered earnings you have, but in no case can the reduction be more than 50% of your U.K. pension.
If needed, you can get your Earnings Statement from Social Security, which will show your actual taxable SS earnings for each year to compare against the WEP substantial earnings chart found at the above link. The easiest way to get your Earnings Statement is via your “My Social Security” online account. If you haven’t yet set up your personal online account with SS, you can easily do so at this link: www.ssa.gov/myaccount.
So, the bottom line is this: If you have contributed to U.S. Social Security from “substantial” earnings for at least 30 years, your Social Security benefit will not be affected by your U.K. pension; if you have less than 30 years of contributions to SS, it will. As you may know, you cannot collect your U.S. Social Security until you are at least age 62, but if you claim at that age your benefit amount will be reduced by 30%. You’ll reach your full retirement age at age 67, and that is the point at which you will get 100% of what you’ve earned by working in the U.S. – subject to WEP reduction only if you have less than 30 years of contributions to Social Security.
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 firstname.lastname@example.org.