Windfall Elimination Provision
The Windfall Elimination Provision affects your Social Security benefits that are based on your earnings. The rule may reduce your Social Security benefit, but it will not eliminate it.
Social Security benefits are based on your average monthly earnings over a 35-year period, adjusted for inflation. When Social Security determines your benefits, it separates your average earnings into three amounts and multiplies the amounts using three different factors. For example, if you turned 62 in 2021, the first $996 of your average monthly earnings would be multiplied by 90%, while the earnings from $997 to $6,002 would be multiplied by 32%, and any remainder by 15%.
If you’re also eligible for a CalSTRS retirement benefit, the 90% factor is reduced to 40%. The exact amount of the reduction is based on your years of substantial earnings covered under Social Security and adjusted every year. The maximum reduction in Social Security benefits under the Windfall Elimination Provision is $498 per month if you were age 62 in 2021.
If you earned at least 40 Social Security credits through other employment, you should apply for Social Security, even though you may receive a reduced Social Security benefit. You’re exempt from the Windfall Elimination Provision if you were eligible to retire from CalSTRS before January 1, 1986, or if you have 30 or more years of substantial earnings under employment covered by Social Security. In 2021, substantial earnings were $26,550 annually. With 21 to 29 years of substantial earnings, the 90% factor is reduced on a sliding scale beginning at 45% for 21 years up to 85% for 29 years.
Additional information about the Windfall Elimination Provision is available at SSA.gov.