What Does the Social Security Fairness Act Mean for You?
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.
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