Ask Larry: ​​​​​​Is Social Security Right To Cut My Benefit?

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Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today’s column addresses the affect of foreign pensions on Social Security benefits, calculating excess spousal benefits, filing early due to health problems and disability benefits. Larry Kotlikoff is the founder and president of Economic Security Planning, a company that markets a Social Security Benefits calculator referred to in this post.

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Is Social Security Right To Cut My Benefit?

Hi Larry, Before I moved to the United States. I lived and worked in London, England until I was about 27(1972). I have worked since then 100% in the United States. I began collecting Social Security the age of 70, and also found out that I was eligible to receive a UK pension around the same time. However, I received my US pension before I received the UK pension by about a year and declared my UK pension a few months ago.

Social Security is currently paying me $1953 a month and want to change it to $1741. My UK pension pays me approximately $200 a month(depending on the value off sterling. Furthermore, they are seeking to claw back $2982. Originally when applying for Social Security and agent on the telephone asked if I was receiving a UK pension and I said no but I’m in the process of applying and I said, put this cost me any reduction in Social Security. I told him I would receive around $200 and he said it would reduce my so’s Social Security benefit by about $50 a month. My income over the years since I’ve lived in the United States between 1972 and 1970. I have had about 10 to 15 years of Social Security income and in the last 15 to 20 years. Most of my income has been investment income and I have never received any foreign income since 1972. Thanks, Ralph

Hi Ralph, It sounds like Social Security is probably correct about the UK pension reducing your US Social Security benefit. This is due to the Windfall Elimination Provision (WEP). There are exceptions to WEP, but unless you’ve had more than 30 years of ‘substantial earnings’ in the US, you are probably subject to the WEP reduction. The reduction would be applicable beginning with the month of your entitlement to the UK pension, so if you were paid your full US Social Security benefit for any of those months, Social Security can propose withholding your current benefits to recover the overpayment.

The only other possibility that might exempt you from reduction is if the UK had to credit your US work in order to qualify you for a benefit from their program. If they did, it would be referred to as a totalization benefit, and would be…

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