For Mark Roberts’ Use: Many people plan to retire utilizing income from a combination of Social Security and a pension from work. This might be a good plan for a comfortable retirement, but you should be aware of how your pension could affect benefits from Social Security.

Most workers who earn a pension have also paid into Social Security taxes, and in this case their pension will not affect Social Security benefits. However, in some cases workers might receive earnings on which Social Security taxes were not paid, such as from the government, a non-profit organization, or a foreign employer. If the pension is based on these earnings, but the worker is also eligible for Social Security based on wages from other jobs, the amount of this person’s benefit may be affected by the Windfall Elimination Provision (WEP). The WEP was enacted by Congress in 1983, in response to the unfair way in which Social Security benefits had been calculated for workers who mainly earned income from a job which did not require Social Security taxes to be paid.

The reduction in benefit amounts is dependent upon the year in which a worker turns 62 and the number of years he or she paid into Social Security. The reduction cannot equal more than one half of the worker’s pension, and the WEP does not apply to survivor benefits.

If you’re planning to retire with a combination of pension and Social Security income, and you paid into Social Security via your primary employer, you probably don’t have to worry about the WEP. However, if you suspect the WEP might apply to you, then you should talk to your financial advisor to be sure you have enough retirement income planned for your golden years. Failure to plan around these details could result in an unpleasant surprise at retirement time, in the form of a much smaller Social Security check than you had anticipated.