Annuity Effect on Social Security Benefits

A worker can receive Social Security benefits and annuity payments during retirement. In some cases, an annuity can affect the amount of benefits a retiree receives.


Annuities are financial products that distribute a specific amount of money with interest over a period of time. An annuity can be funded individually or as a retirement plan from an employer.

Social Security

Social Security benefits are paid to people who have worked 10 years or more, earned at least 40 credits and pay Social Security taxes. Each credit is $1,120 of earnings, and a person can get up to four credits a year.

Annuity Effect

A person who receives payments from an annuity in which the employer did not take out Social Security taxes will have his benefits reduced. This is called the Windfall Elimination Provision.


The Windfall Elimination Provision affects those who after 1985 turned 62, became disabled or were eligible for a retirement plan even if they are still employed.


There are several exceptions to the Windfall Elimination Provision for those receiving an annuity as their retirement plan. They include becoming a government employee after 1983, receiving a retirement plan from a railroad company or having 30 years of substantial earnings under Social Security.