What Will Happen to Your SSA Benefits Under the Fairness Act?

Are you among the 66 million Americans relying on Social Security benefits? If so, you’re not alone. (1) 

On average, retirees get about $1,827 a month from Social Security. (2) For many, this money is a big part of their retirement income. The new Social Security Fairness Act changes how some government workers get their benefits. It fixes two old rules – the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). These rules used to affect how much some government employees got from Social Security. 

Ever think about how your job might change your Social Security benefits? Let’s examine what this new law means and how it could affect your retirement. 

Breaking Down the Social Security Fairness Act 

The Social Security Fairness Act is a new law that modifies retirement benefits for certain government workers. It eliminates two provisions that previously affected Social Security payments for many public employees. These provisions, known as the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP), applied to workers such as teachers, firefighters, and police officers. Before this law, if these workers had a pension from a job not covered by Social Security, their Social Security benefits were calculated differently compared to other retirees. (3) 

What Does This Mean for You? 

The impact of this act is far-reaching: 

• Nearly 2.1 million could see their monthly benefits increase by an average of $360. (4) 
• The GPO and WEP have significantly impacted families’ financial planning and retirement security. These provisions could reduce Social Security benefits for retirees with pensions from non-covered employment, complicating retirement income strategies for many households. 
• Public sector workers can now expect to receive their full Social Security benefits, regardless of their other pensions. 

This shift in policy could significantly enhance the financial security of affected individuals and their families. But what if you’re not a public sector worker? Understanding these changes is still crucial, as they reflect broader trends in retirement policy that could affect everyone. 

In Simpler Terms: 

Imagine a teacher who worked for a public school system for many years. 

• WEP: If this teacher retires, their own Social Security benefits might be reduced because they didn’t pay into Social Security during their teaching career. 
• GPO: If this teacher’s spouse also applies for Social Security benefits (based on the teacher’s earnings record), those spousal benefits could be reduced due to the teacher’s non-covered pension. 

Retroactive Payments 

The Social Security Administration (SSA) will automatically adjust benefits for eligible beneficiaries. There is no need to apply for a retroactive payment. The SSA will begin processing retroactive payments in early 2025. 

However, it is not yet clear whether retroactive payments will be issued as a lump sum or distributed over time. (3) 

Planning for Your Future 

Whether you’re directly affected by this act or not, it’s a reminder of how important it is to stay informed about changes in retirement benefits. Here are some key points to consider: 

• Review your retirement income sources: How do Social Security benefits fit into your overall plan? 
• Understand your pension plans: If you have a pension, how does it interact with Social Security? 
• Think about timing: When is the best time for you to start claiming Social Security benefits? 

Looking Ahead 

As the retirement landscape shifts, everyone needs to stay informed about these changes. They reflect broader trends in retirement policy that could affect many people’s financial planning. Whether you’re a public sector worker or not, understanding these changes can help you prepare for your financial future. 

Everyone’s financial situation is different. Keeping up with changes in retirement benefits and considering how they might affect your financial approach is a good idea. As retirement policies change, it might be worth reviewing your specific retirement strategy with a financial professional to make sure it still fits your goals. 

Sources: 

(1) Government Accountability Office. “Social Security: Information on Benefit Provisions and Proposals to Address Benefit Adequacy.” GAO, 14 Dec. 2022, www.gao.gov/products/gao-23-106667 

(2) Boldin, Cory. “Average Retirement Income 2023: How Do You Compare?” Boldin Wealth Management, 3 Jan. 2023, www.boldin.com/retirement/average-retirement-income-2023-how-do-you-compare/ 

(3) “Social Security Fairness Act: What Will Happen Your Benefits Now It’s Become Law.” Nasdaq, 15 Jan. 2025, www.nasdaq.com/articles/social-security-fairness-act-what-will-happen-your-benefits-now-its-become-law 

(4) Underwood, Lauren. “President Biden Signs Underwood-Backed Bill to Increase Social Security Benefits for Nearly 3 Million Americans.” U.S. Representative Lauren Underwood, 12 Jan. 2025, underwood.house.gov/media/press-releases/president-biden-signs-underwood-backed-bill-increase-social-security-benefits 

We are not affiliated with the Social Security Administration or any other governmental agency. This information is being provided only as a general source of information and is not intended to be the primary basis for retirement planning decisions. It should not be construed as advice designed to meet the particular needs of an individual situation. Please seek the guidance of a financial professional regarding your particular financial concerns. Consult with your tax advisor or attorney regarding specific tax issues.