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In this episode of Across the Pond, we're discussing the Social Security Windfall Elimination Provision, with the aim of providing useful information to British expatriates living in the US. While Social Security is a real political hot potato, it's one that is unlikely to be dropped - so it's worthwhile to understand these concepts fully before making decisions about your retirement.
Social Security is more generous than most people think, with the retirement benefits, disability benefits, and survivors' benefits involved. Benefits are based on taxes paid on an individual's wages, with an entitlement built up over time. However...
The Windfall Elimination Provision (WEP) can affect British expatriates who have earned state pension benefits in the UK and are also eligible for US Social Security, and could impact expats in unexpected ways. WEP reduces the Social Security benefits for those who have not paid into the US Social Security system for a certain number of years.
The good news is that the WEP reduction will not apply if you have been paying into Social Security for 30 years (i.e. your contribution record is 30 years or more). If you are interested in reducing your WEP penalty, then consider continuing to work and make SS contributions for the full 30 years (or as close as you can get).
Both of these are relevant and important topics for our clients and are very poorly understood, but Plan First Wealth is here to help! We hope you will listen and subscribe to learn more.
