Has your husband looked into his Canadian pension yet? My uncle gets both his Canadian and US benefits, it's not one or the other. They're actually pretty generous up there!

Just to add one important detail - your husband should apply for his Canadian benefits first before the US application. This is because the SSA will ask for verification of his Canadian benefits as part of calculating any potential WEP (Windfall Elimination Provision) adjustment. Also, there's a specific form for totalization claims: the SSA-2490-BK. Not all SSA representatives may be familiar with it, so ask specifically for someone experienced with totalization claims when you call or visit an office. One more tip: when you do apply, the SSA might initially deny the claim if they only look at US credits. Make sure they understand it's a totalization claim so they consider the combined credits from both countries.

To directly answer your original question: The WEP applies when you receive a pension based on work where you didn't pay Social Security taxes. The key factor is not whether you receive monthly payments or a lump sum, but whether the payment is based on non-covered employment. An important exception exists if your pension is based on a mix of covered and non-covered employment. If that's the case, the SSA will only apply WEP to the portion derived from earnings where you didn't pay Social Security taxes. Request a detailed WEP calculation from SSA before making your decision.

Another consideration: depending on your age and specific situation, you might want to look into whether the "substantial earnings test" might help reduce your WEP impact. If you can demonstrate that you had substantial earnings under Social Security for enough years (the magic number is 30, but there's a sliding scale), your WEP reduction can be lessened or eliminated. This would be true whether you take the pension as a lump sum or monthly payments.

This reminds me of when I retired. I think what's happening is the monthly test vs. annual test confusion. When you first retire, you get to use the monthly test which is definitely better for people who work part of the year then stop completely.

I just called SSA again using that Claimyr service someone mentioned (it actually worked!), and got through to a very knowledgeable agent. She confirmed I can absolutely start benefits in December for January payment using the monthly earnings test since I haven't worked since July. She also said I could technically apply for benefits going back to August (first payment in September) if I wanted to, but I'd need to specifically request retroactive payments for those months. I'm going to start with December/January payment as originally planned. Thanks everyone for helping clear this up! The monthly earnings test vs. annual test distinction was the key piece I was missing.

Make sure to double check the FRA for survivor benefits! Some people don't realize survivor FRA can be different from retirement FRA depending on your birth year. For most people born 1943-1954, FRA for survivors is 66, not 67. Just want to make sure you have the right age!

One more thing to consider - when you apply, do it as a "filing strategy" rather than just applying for benefits. Make it very clear you're: 1) Filing ONLY for survivor benefits at your FRA 2) Explicitly deferring your retirement benefits to grow delayed retirement credits 3) Planning to switch to your own higher benefit at age 70 I recommend applying in person at your local office if possible for this type of situation. Over the phone or online applications sometimes don't handle these strategic filings correctly. Bring a printed statement explaining your intention if needed.

Something NO ONE has mentioned yet is that sometimes SSA will send you a letter saying what month your benefits officially start - keep this letter!!! You might need it to prove when you were entitled to benefits vs when you actually got paid. Especially if there's ever an audit or question later.

Just to add one more point of clarification - when the backpay arrives, the SSA-1099 will show the total amount paid to you during that calendar year. It won't specify which months the payments were for, just the total received. This is why it's important to keep your award letter that explains the breakdown of payments. Also, since you're asking about taxes, remember that depending on your combined income (adjusted gross income + nontaxable interest + half of SS benefits), up to 85% of your Social Security benefits may be taxable. Since you're still working, this is something to be aware of for your tax planning.