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2012 COLA Update
Federal retirees in the CSRS retirement system will receive a COLA increase
of 3.6 percent in their annuities in 2012, while FERS retirees
will receive a 2.6 percent increase. Complete COLA
information is available on this site.
Retiree JOB Opportunities
Many job opportunities are available for federal retirees − and those planning to
retire soon − to earn additional income in retirement. Our
Jobs Board has updated listings targeted
to federal retirees. Many companies seek out retired federal employees due
to their government experience and contacts. You can also explore high
paying
opportunities for those that hold current Security Clearances.
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If you accrued 40 quarters (10 years) of employment where social
security payments were withheld you are eligible for benefits. Your
Primary Insurance Amount (PIA), which is simply your Social Security
payment, will be impacted. The Windfall Elimination Provision (WEP) can
significantly reduce your Social Security payout.
Complete information with links to FREE online WEP calculators are
listed below.
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WEP Menu
Windfall Elimination Provision (WEP)
Many federal employees have held other jobs before, during, and
after retirement including feds who served active military and/or Reserve and
National Guard duty where earnings were subject to Social Security. If you
aren’t sure if you are eligible you need to contact Social Security at 1-800-772-1213 or visit their excellent web site at
www.socialsecurity.gov to request a
history of your Social Security payment and status.
This provision reduces your Social Security benefits if you have less than
30
years of “substantial” coverage and earned a CSRS federal
retirement benefit. Substantial earnings equaled $2,250 dollars in 1972 and $20,475 in 2012.
A complete list of substantial years is
included below.
If you receive a relatively low pension, you are protected. “Your Social
Security reduced benefit cannot be more than one-half of that part of your
pension based on your earnings after 1956 from which Social Security taxes were
not deducted.”
The most your Social
Security benefit will be reduced with 20 or less years of
substantial earnings in 2012 will be $387.
Social Security benefits are based on the worker’s average monthly
earnings adjusted for inflation. They separate your average earnings into
three amounts and multiply the amounts using three factors. For example, for
a worker who turns 62 in 2012, the first $767 of average monthly earnings is
multiplied by 90 percent; the next $3,857 by 32 percent; and the remainder
by 15 percent. The sum of the three amounts equals the total monthly payment
amount.
The 90 percent factor is reduced in the modified formula and phased in
for workers who reached age 62 or became disabled between 1986 and 1989. For
those who reach 62 or became disabled in 1990 or later, the 90 percent
factor is reduced to 40 percent.
There are exceptions to this rule. For example, the 90 percent factor is
not reduced if you have 30 or more years of
“substantial” earnings in a job where you paid Social Security taxes.
See the first table that lists the amount of substantial earnings for each
year, the second table lists the
percentage reduction for the number of substantial years from 21 to 30.
The annual Social Security Earnings Reports that they previously sent out
provided all of this detailed information and you could easily determine
your number of substantial earnings years. If you are age 60 or older you
will continue receiving these reports.
Substantial Earnings
|
Year |
Substantial
earnings |
| 1937-54 |
$ 900
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| 1955-58 |
$1,050
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| 1959-65 |
$1,200
|
| 1966-67 |
$1,650
|
| 1968-71 |
$1,950
|
| 1972 |
$2,250
|
| 1973 |
$2,700
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| 1974 |
$3,300
|
| 1975 |
$3,525
|
| 1976 |
$3,825
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| 1977 |
$4,125
|
| 1978 |
$4,425
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| 1979 |
$4,725
|
| 1980 |
$5,100
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| 1981 |
$5,550
|
| 1982 |
$6,075
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| 1983 |
$6,675
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| 1984 |
$7,050
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| 1985 |
$7,425
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| 1986 |
$7,875
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| 1987 |
$8,175
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| 1988 |
$8,400
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| 1989 |
$8,925
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| 1990 |
$9,525
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| 1991 |
$9,900
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| 1992 |
$10,350
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| 1993 |
$10,725
|
| 1994 |
$11,250
|
| 1995 |
$11,325
|
| 1996 |
$11,625
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| 1997 |
$12,150
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| 1998 |
$12,675
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| 1999 |
$13,425
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| 2000
|
$14,175
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| 2001 |
$14,925
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| 2002 |
$15,750
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| 2003 |
$16,125 |
| 2004 |
$16,275 |
| 2005 |
$16,725 |
| 2006 |
$17,475 |
| 2007 |
$18,150 |
| 2008 |
$18,975 |
| 2009 -
2011 |
$19,800 |
| 2012 |
$20,475 |
Years of
substantial
earnings |
Percentage |
| 30 or more |
90 percent |
| 29 |
85 percent |
| 28 |
80 percent |
| 27 |
75 percent |
| 26 |
70 percent |
| 25 |
65 percent |
| 24 |
60 percent |
| 23 |
55 percent |
| 22 |
50 percent |
| 21 |
45 percent |
| 20 or less |
40 percent |
To estimate your WEP reduction use the Free software offered by
FedRetireSoftware. The Social
Security web site also offers a WEP calculator however you will need
to enter all your past earnings taxed by Social Security, which are shown on
your Social Security
Statement. The Social Security office automatically sends Social Security
Statements to workers or former workers age 25 or older about 3 months before
their birthdays. If you have not received one,
you can submit a request online
and receive your Statement by mail in 2 to 4 weeks. However, if you request a
Statement this year, we will not automatically send you another Statement until
next year.
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