Understanding WEP Calculations: How Your Benefit Is Reduced

WEP modifies the standard Social Security benefit formula by reducing the first "bend point" percentage.

• **Normal formula**: 90% of first $1,174 (2024) of AIME
• **WEP formula**: As low as 40% of first bend point
• **AIME**: Average Indexed Monthly Earnings over 35 highest years
• **Bend points**: Dollar thresholds in SS benefit calculation
• **Result**: Permanent reduction in monthly SS benefit

The Social Security Administration provides a free online tool to estimate your WEP-adjusted benefit.

• **Location**: ssa.gov/benefits/retirement/planner/wep.html
• **Best approach**: Create my Social Security account first
• **Information needed**: Monthly pension amount, birth date
• **Earnings history**: Pre-filled if you have SSA account
• **Years of coverage**: Count your substantial SS earnings years

More years of substantial SS-covered earnings reduces your WEP penalty.

• **20 or fewer years**: Maximum WEP (40% first bend point)
• **21 years**: 45% first bend point
• **25 years**: 65% first bend point
• **29 years**: 85% first bend point
• **30+ years**: No WEP (full 90% first bend point)

WEP has caps that limit how much your benefit can be reduced.

• **2024 maximum**: $558/month reduction
• **Half-pension rule**: Cannot exceed 50% of your non-covered pension
• **Adjusts annually**: Maximum increases each year with wage growth
• **Example**: $800 pension means max $400 WEP reduction
• **Protection**: Prevents WEP from eliminating benefit entirely

See how WEP actually affects a typical public employee's Social Security benefit.

• **Step 1**: Calculate AIME (average monthly earnings)
• **Step 2**: Apply WEP-modified first bend point (e.g., 40%)
• **Step 3**: Apply normal formula for amounts above first bend point
• **Step 4**: Compare to normal benefit to see reduction
• **Step 5**: Verify reduction doesn't exceed maximum limits