Q: I retired with Civil Service Retirement System at 50 years old with 25 years’ law enforcement service. I’ve been self-employed for the past three years and reached my 40 quarters, including my pre-federal employment. I make a decent self-employment income now at around $90,000, and pay substantial Social Security quarterly payments. My concern is that basically the offset is going to take away most of my Social Security pay at 62/65. That said, are my payments to Social Security still mandatory? I realize my quarterly taxes are, and the IRS distributes them accordingly.
A: Deductions for Social Security are mandatory and will be taken from all earnings from wages and self-employment. While you will be affected by the windfall elimination provision, you will still receive a Social Security benefit when you apply for it. It will be smaller than it would have been had you either been 1) receiving an annuity from a retirement system where you paid Social Security taxes or 2) had at least 30 years of Social Security-covered wages.