See how your pension may affect your benefits (2024)

FAQs

How does a pension affect Social Security benefits? ›

For Retirement and Disability benefits

Your Social Security benefit might be reduced if you get a pension from an employer who wasn't required to withhold Social Security taxes. This reduction is called the “Windfall Elimination Provision” (WEP). It most commonly affects government work or work in other countries.

How much will my Social Security benefits be reduced? We'll reduce your Social Security benefits by two- thirds of your government pension. For example, if you get a monthly civil service pension of $3,000, two-thirds of that, or $2,000, must be deducted from your Social Security benefits.

We won't reduce your Social Security benefit amount if you only performed federal work under a system such as the Federal Employees' Retirement System (FERS). Social Security taxes are withheld for workers under FERS. Social Security benefits are intended to replace only some of a worker's pre-retirement earnings.

The Social Security Administration does not bar you from collecting pension benefits in addition to SSDI. As long as your pension does not prohibit you from collecting SSDI benefits you can generally collect both.

Table of Contents. Your military pension does not affect your Social Security benefits. You'll get your full Social Security benefit based on your earnings. Survivors benefits may affect benefits payable under the optional Department of Defense Survivors Benefit Plan.

Taxes on Pension Income

You may owe federal income tax at your regular rate as you receive the money from pension annuities and periodic pension payments. But if you take a direct lump-sum payout from your pension instead, you must pay the total tax due when you file your return for the year you receive the money.

When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you're self-employed. We include bonuses, commissions, and vacation pay.

The windfall elimination provision reduces the first of those percentages. How much the SSA reduces it depends on how many years you paid Social Security taxes. The most it can fall is from 90% to as low as 40% if you spent fewer than 20 years in jobs on which you paid Social Security taxes.

We reduce your benefits if you start early by about 0.5 percentage points on average for each month you start receiving benefits before your full retirement age. For example, if your full retirement age is 67, and you sign up for Social Security when you're 62, you would only get about 70% of your full benefit.

If you are wondering whether or not you can collect Social Security if you have a government pension, the answer is yes.

When my husband dies, do I get his Social Security and mine? ›

You cannot claim your deceased spouse's benefits in addition to your own retirement benefits. Social Security only will pay one—survivor or retirement. If you qualify for both survivor and retirement benefits, you will receive whichever amount is higher.

The maximum Social Security check

Your maximum benefit if you file at age 62 – the youngest possible age – is $2,710 per month. Your maximum benefit if you file at full retirement age – between 66 and 67 – is $3,822 per month.

Government pension offset (GPO)

A provision that reduces and may eliminate the amount of spousal and survivors benefits paid to someone who's eligible for a pension from work not covered by Social Security taxes.

You can retire with Social Security and a pension at the same time, but the Social Security Administration (SSA) might reduce your Social Security benefit if your pension is from a job at which you did not pay Social Security taxes on your wages. There are two different kinds of pensions: covered and noncovered.

Social Security's special minimum benefit pays at least $49.40 per month in 2023 and $50.90 in 2024. Social Security's special minimum benefit tops out at $1,033.50 per month in 2023 and $1,066.50 in 2024. You'll receive 100% of the benefit if you file at full retirement age or later.

You are required to provide your pension information so we can make any necessary adjustments to your benefit. Providing us with this information when you apply or when you start receiving a pension will help you avoid an overpayment.

For the earnings limits, we don't count income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains.

Social Security benefits are typically computed using "average indexed monthly earnings." This average summarizes up to 35 years of a worker's indexed earnings. We apply a formula to this average to compute the primary insurance amount (PIA). The PIA is the basis for the benefits that are paid to an individual.