Social Security is not a personal retirement fund. Social Security is not the same thing as a pension, despite what some might initially assume. Pensioned jobs don’t pay into Social Security. Pensioned retirees can receive Social Security benefits, but due to the Windfall Elimination Provision (WEP), they get a reduced benefit regardless of earning history. The “Social Security Fairness Act of 2021,” seeks to remove the WEP. MarketWatch’s Brenton Smith offers his point-of-view on why this is disastrous for Social Security’s solvency crisis.
Windfall Elimination Provision
WEP protects the benefits of those who paid into Social Security, slowing insolvency. Social Security benefits are calculated in a specific way, and are placed into three separate brackets, depending on range of wages. Each bracket is multiplied by a percentage and the total sum equals your full retirement age benefit. WEP lowers the percentages of each bracket, lowering benefits overall.
Eliminating the WEP allows pensioned retirees a higher benefit, in addition to their pension payout.
A higher benefit is something any senior deserves. However, the problem is being unable to dependably afford these new, higher benefits. The current Social Security Trust doesn’t account for pensioned retirees receiving the same level of benefits. Pensioned employees would have to start paying into Social Security to successfully fund this plan.
The Social Security Fairness Act of 2021 is not the only legislation looking to remove WEP. It could be beneficial, but there needs to be a clear plan to make Social Security solvent; otherwise, we’re celebrating too early.
The Council for Retirement Security sole purpose is to protect the Social Security Trust. We can have higher benefits and a solvent program by joining together and promoting legislation that prioritizes our needs.