This case is appropriate for an introductory financial analysis course, intermediate case study in financial analysis, or any course that is preparing students to take the CFA exam. Because of the policy analysis that is included, it could also be used in a public finance class or an intermediate microeconomics course. It provides a basis for developing an understanding of how Social Security benefits are calculated. The specific focus of the case is on the Windfall Elimination Provision and the calculations which must be made to re-estimate benefits for those who are affected by this provision. The student plays the role of financial advisor. When advising a client about the stream of income which can be anticipated in retirement, it is vitally important to realize that, if the client has worked both as a government employee and in the private sector, the benefits the client will receive from Social Security may be less than what is indicated in the annual Social Security Statement. The policy implications section of the case also points out some of the surprising affects resulting from the structure of the Windfall Elimination Provision. The questions at the end of the case test the students understanding of the complexities of the system. Depending on the instructors guidance, students can familiarize themselves with the on-line calculators developed by the Social Security Administration.
The Windfall Elimination Provision & Social Security Benefits: A Case Study