On January 5, 2025, President Biden signed into law the Social Security Fairness Act, a significant change that primarily affects former municipal, state, and federal government workers, including teachers, police officers, and firefighters. This law could add hundreds of dollars to beneficiaries’ monthly Social Security checks.
What Was the Issue Before the Social Security Fairness Act?
Up to now, as a retiree or surviving spouse of a retiree, if you received both a Social Security check and a pension based on work that was not covered by Social Security, your Social Security benefit would have been reduced.
This reduction stemmed from two provisions:
- The Windfall Elimination Provision (WEP)
- The Government Pension Offset (GPO)
The newly enacted Social Security Fairness Act repeals both provisions, restoring benefits to those who had been impacted.
What Changes Should You Expect?
As of now, the Social Security Administration (SSA) has not officially detailed how or when the law will be implemented. However, the SSA has stated that the law applies to “benefits payable for months after December 2023.”
Here are some key takeaways:
- Beneficiaries may be eligible to receive a lump sum payment for the difference between benefits actually received and what they should have received during 2024.
- Based on estimates from the Congressional Budget Office, monthly Social Security payments are expected to increase by $360 on average for those affected.
What Steps Should You Take?
Most beneficiaries don’t need to take any action other than verifying their mailing address and direct deposit information with the SSA. You can do this easily through your mySocial Security account.
However, if you are a surviving spouse or ex-spouse who didn’t file for Social Security benefits due to a pension offset, you’ll need to apply for spousal benefits directly through the Social Security Administration’s website.
Who Is Affected by the Social Security Fairness Act?
The repeal of the WEP and GPO provisions impacts a relatively small group of people—about 2,730,000 individuals – roughly 4% of current Social Security recipients or approximately the population of Chicago. Additionally, future public sector retirees will also benefit from this change. While this is a small percentage of all Social Security recipients, it may have a significant impact for those affected.
The Bigger Picture: Impact on Social Security’s Future
The Congressional Budget Office estimates that this repeal could accelerate the depletion of the Social Security retirement trust fund by about six months. Insolvency is now projected to occur around 2033, a key consideration for lawmakers as they evaluate long-term Social Security reform.
What Does this Mean for You?
If you’re a public sector retiree or surviving spouse, the Social Security Fairness Act could restore Social Security benefits you previously lost due to WEP and GPO provisions.
To ensure you’re prepared, verify your information with the SSA and stay updated on implementation timelines. If you have questions about how this change impacts your financial plan, the BentOak Capital team is available to assist.
IMPORTANT DISCLOSURE INFORMATION: Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by BentOak Capital [“BentOak”]), or any non-investment related services, will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. BentOak is neither a law firm, nor a certified public accounting firm, and no portion of its services should be construed as legal or accounting advice. Moreover, you should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for personalized investment advice from BentOak. Please remember that it remains your responsibility to advise BentOak, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure Brochure discussing our advisory services and fees is available upon request at www.bentoakcapital.com/disclosure. The scope of the services to be provided depends upon the needs of the client and the terms of the engagement. Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your accounts; and, (3) a description of each comparative benchmark/index is available upon request. Please Note: Limitations: Neither rankings and/or recognitions by unaffiliated rating services, publications, media, or other organizations, nor the achievement of any designation, certification, or license should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if BentOak is engaged, or continues to be engaged, to provide investment advisory services. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Rankings are generally limited to participating advisers (see link as to participation criteria/methodology, to the extent applicable). Unless expressly indicated to the contrary, BentOak did not pay a fee to be included on any such ranking. No ranking or recognition should be construed as a current or past endorsement of BentOak by any of its clients. ANY QUESTIONS: BentOak’s Chief Compliance Officer remains available to address any questions regarding rankings and/or recognitions, including the criteria used for any reflected ranking.