I also have a couple of questions for Beltime - do you know if the WEP is applied the same if you take SS at 62 instead of your full benefit age of 66 or whatever? Also if you base your benefit on an ex spouse (married over 10 years and never remarried) does that effect it?
I believe it does. However, it's worth going into the calculation for how WEP is calculated. You may be familiar with how your Social Security benefit is calculated, but I'll quickly review.
1) Your earnings are indexed to account for changes in inflation (for this purpose, use only earnings on which you paid Social Security taxes)..
2) Using your 35 highest-earning years, find your average monthly indexed earnings.
3) Your Social Security benefit
is calculated as:
90% of the first $856 monthly earnings
32% of the monthly earnings between $856 and $5157
15% of the monthy earnings above $5157
4) If you retire earlier or later than full retirement age, reduce or increase your benefit accordingly.
Now, the only step WEP changes is 3. And WEP only affects the first bend point. So, to calculate the Social Security benefits if you are subject to WEP, it is:
45% of the first $856 monthly earnings
32% of the monthly earnings between $856 and $5157
15% of the monthy earnings above $5157
Only the bolded part changed.