Q&A: Social Security vs. state pension

Dear Liz: I worked enough in private industry to qualify for Social Security benefits, but then worked for the state and did not contribute to Social Security for another 20 years. So, I will have a state pension at my current salary as well as Social Security representing my former salary, which was about one-third of what I’m making now. My question is, would it be of value to retire early and return to private industry for a few years?

Answer: Your Social Security benefit is likely to be reduced because you’re getting a pension from a job that didn’t pay into Social Security. This is known as the windfall elimination provision, and you can learn more about it on the Social Security website.

You can avoid the provision if you had 30 years or more of “substantial earnings” (which varies by year but was at least $22,050 in 2015) from jobs that paid into Social Security.
It probably wouldn’t make much sense to quit a well-paying job with a presumably generous pension to try to boost a much smaller Social Security payout. But a fee-only financial planner could run the numbers for you and explain your various options.

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