Social Security’s Windfall Elimination Provision and You

Most everyone has heard of the haircut many firefighters receive on their Social Security benefit. Here’s how it works…

You qualify for a Social Security benefit if you have 40 quarters of “covered earnings.” In 2022, paying into Social Security on $6,040 a year gets you 4 quarters. It only takes 10 years of covered earnings to earn a Social Security benefit. 

Social Security is set up to replace only a portion of a worker’s pre-retirement earnings. Before 1983, workers with a “non-covered pension” (a.k.a. firefighters who didn’t pay into social security) had benefits calculated as if they were ultra low-wage earners. For example, the money you earned at your part-time job appeared to be the only income you earned that year. As result, Social Security paid out a much higher benefit. 

The Windfall Elimination Provision (WEP) changed all that.

Without getting into the weeds with Social Security’s full calculation, the math works like this: 

Most people receive 90% of the first $1,024 per month of their benefit in 2022 

Most firefighters receive 40% of the first $1,024 per month 

The important thing to recognize is the benefit you see when you login to www.ssa.gov is likely not accurate. 

If you have paid into social security with another fire department or through another job, you may be in the WEP phaseout.  

The WEP phases out between 20 and 30 years of “substantial earnings” (which are different than covered earnings mentioned earlier).  

Substantial earnings in 2022 is $27,300. 

Each year after 20 years of paying into Social Security at this level increases the calculation for your benefit by 5%. 

Years of substantial earnings - percent of the first $1,024 you will receive monthly: 

20 – 40% 

21 – 45% 

22 – 50% 

23 – 55% 

24 – 60% 

25 – 65% 

26 – 70% 

27 – 75% 

28 – 80% 

29 – 85% 

30 – 90% 

The Social Security Survivor’s benefit is not reduced by the WEP 

If you die first, your spouse will continue to receive whichever Social Security benefit is higher, yours or theirs. However, yours will be determined by the standard Social Security formula, without any reduction for the WEP. 

Create a login 

It’s easy. Everyone should login to www.ssa.gov and check their earnings annually. Your entire earnings record since your first year of working will be listed. Your advisor can use this information to calculate your actual Social Security benefit factored for the WEP. 

*Printable version below