Ask Larry

When I applied for Social Security benefits in 2014 while working in the US, the SS representative told me that if I moved back to Canada and ever applied for CPP that I had to contact SS because it would affect my benefit payments. So when I moved back to BC (I am a dual citizen who has worked in both countries as has my wife who is a Canadian citizen only), I never applied for CPP. But a financial advisor told me recently that I could apply for CPP without losing my SS payments. Because of the favorable currency exchange and the higher amount of my SS benefits compared to CPP benefits, I am scared to apply for CPP in SS is going to reduce my benefits. What is the truth of this situation?

Hi. Collecting a Canadian pension that's based on your earnings in that country might reduce your U.S. Social Security benefit, but not by more than 50% of the amount of your Canadian pension. If your U.S. benefits are affected by your Canadian pension, it would be due to the Windfall Elimination Provision (WEP). WEP can cause a person's U.S. Social Security retirement or disability benefit rate to be lowered if they receive a pension based on their earnings that weren't subject to U.S. Social Security taxes (https://www.ssa.gov/pubs/EN-05-10045.pdf).

However, there is a WEP guarantee provision limits the amount of any WEP reduction to no more than 50% of the amount of the person's non-covered pension. Therefore, you'd almost certainly get more total benefits if you collect both pensions rather than just your U.S. benefits.

Our software (https://maximizemysocialsecurity.com/purchase) is programmed to handle computations involving WEP, so you may want to use the software to calculate how much, if any, collecting a CPP pension would affect your U.S. Social Security benefit rate.

Best, Jerry