WEP question for Social Security
 

By the time I retire, my wife and I will both qualify for a UK state pension of around 175 GBP each per week.

My wife has not worked enough to qualify for ANY US Social Security. I will be claiming SS for us both. She is no longer able to work for health reasons.

I understand that my SS will be reduced under WEP by around 50% of my UK pension. The question is, will my wife's UK pension affect my (our) Social Security payments?

I have been working on the assumption that WEP will effectively eliminate 50% of our combined pensions but if my wife's will not be affected, we will only lose 25%. That would equate to around $450/month difference.

Re: WEP question for Social Security
 

ASFIK, only your 'income' is used to determine your final benefit under social security.

My income was not used to determine my husband's SS benefit, before or after WEP.

Re: WEP question for Social Security
 

WEP does not apply to spousal benefits. So although your social security will get WEP’d, your wife’s will not be. But your wife will only receive 50% of your benefit because that is what social security provides regardless of WEP. Hopefully you are taking that into account in your calculation. If you wife collects social security before her official retirement age then her benefit will be reduced accordingly (from the 50% base) so in that case she could get less than 50% of your benefit.

Only your UK pension will be taken into account for your WEP calculation, your wife’s UK pension will not be. But in any case since you qualify for the 175 GBP pension you will be at the max WEP anyway, so it makes no difference.

Re: WEP question for Social Security
 

By the time you retire how many years will you have paid into US SS?

Re: WEP question for Social Security
 

25 years. I'm guessing the SS calculator takes that into account as they have my actual contributions history.

Reading other threads, 10 years of my NICs were AVC so only 25/35ths of my UK pension is subject to WEP, so, looks like WEP will actually cost me $330-ish per month rather than the $950 I was estimating.

Re: WEP question for Social Security
 

If you have 25 years it will not be the full 50%, nearer 25%. If you haven't seen this https://www.ssa.gov/benefits/retirem...iaWepjs04.html take a look. It's an online SS calculator that takes into account WEP.

SS pension is not a straight forward calculation. It can have up to three bands and WEP is only applied to the amount in the lower band.

Re: WEP question for Social Security
 

Yes. I had seen that. It more-or-less confirms my calculations.

Another tidbit I read was that WEP is only calculated once (at retirement). But, if I retire at 65 but the UK pension doesn't kick in until 67, what happens then?

Re: WEP question for Social Security
 

I believe WEP does not apply until you actually receive your UK pension, so you get 2 years WEP free. And in that case if you are in good heath you may want to think about deferring your UK pension for as long as you can. I think 70 is the max and you get an increase in your base amount of about 5% for every year you defer. I also believe that when you claim your SS you have to tell them you are anticipating a foreign pension on whatever date and they calculate the WEP at that time, but I am not 100% sure on that, perhaps someone else can chime in on that one.

Re: WEP question for Social Security
 

Yes that's right- I phoned SS and told them that I'd just started to receive a foreign pension and they told me to send a copy of the pension award letter which I did, and they wrote back telling me by how much my SS would be reduced.

Re: WEP question for Social Security
 

For anyone subject to WEP which is likely to be a lot of us, a strategy to think about is to take your Social Security as soon was you can because it will be WEP free until you receive your UK pension. Although you receive a reduced benefit you get it for more years, so pros and cons. But most importantly you get ALL of it! The WEP calculation is performed when you receive your UK Pension and will take into account the fact that you are getting a reduced benefit. If your social security is reduced by x% because if taking it early then so is your WEP deduction. The max amount that can be WEP’d is also correspondingly adjusted. If you combine that with deferring your UK pension until age 70, you can get up to 8 WEP free years, plus a UK pension that is increased by about 5% a year for every year that you defer it. What is best for your depends upon your WEP deduction, tax bracket, projected cash flow, your health and life expectancy. You can modify this strategy to take your social security at 62, 63, 64 etc and/or defer your UK pension to 68, 69 or 70 so a somewhat flexible strategy.

Don’t forget that ALL foreign pensions will contribute to the WEP deduction not just the UK state pension. I think the only exclusions are any part of the state pension due to voluntary NI contributions, any part of a company pension that is due to AVCs or one of the old FSAVC policies.

Re: WEP question for Social Security
 

My U.K. private pensions will WEP me so no need to worry about the OAP, plus I’ll have 28 years of SS contributions. My wife however will have her SS affected by WEP and when talking to someone from the FBU at the US embassy he said that when she applies for SS next year to have her OAP record available so they can calculate it correctly. I logged on and looked at her OAP record and it is quite clear which years are AVCs, so only about half of her OAP will be used in the WEP calculation.

Re: WEP question for Social Security
 

Or you can just get on with life, take your pension when you want too regardless of WEP and enjoy retirement. Otherwise you spend more time worrying about it and scheming to be a few dollars better off, life is too short.

Re: WEP question for Social Security
 

Calculated when you claim SS and that is it. Mind you the COL increase each year would hardly make much of a difference anyway.

Re: WEP question for Social Security
 

Actually if you are subject to the maximum WEP it can add up to tens of thousand of dollars. That money will help me enjoy my retirement just a little more.

Re: WEP question for Social Security
 

When we retire we will both qualify for the full state pension but will probably only have around 10 years of SS contributions - I may have less than 10. I had assumed that at NRD my husband would apply for his SS receiving his full benefit, when the state pension kicks in this would be WEP'd by approx 50%. A couple of years later I would apply for my SS (at my NRD) and receive a spousal benefit amounting to 50% of his WEP'd SS (so 25%). Suprised to hear I may in fact receive the full 50% of his Primary Insurance amount as the spousal benefit is not subject to WEP. If I understand correctly, as a couple, we would be receiving the equivalent of his full Primary Insurance Amount? His 50% of PIA - WEP'd and my 50% of PIA as spousal benefit.

Definitely confusing, as if I continue to work and accrue more than 40 quarters and claim SS on my own earnings record, we would both be WEP'd due to the state pension. I think I need to get the calculator out again ... But as my benefits are going to be less than his, looks as though we will have a few more unexpected pennies in our retirement budget!