Increased Social Security Benefits

Michelle Kuehner |
Categories
Personal Money Planning

by Michelle Kuehner, ChFC®

After being signed into law on January 5, 2025, the Social Security Fairness Act of 2025 sought to rectify substantial inequalities in Social Security payments for specific groups of employees, namely those employed by public and government agencies. Teachers, police officers, and government employees were among those whose Social Security benefits were reduced by two regulations known as the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). 

The WEP reduced Social Security benefits for those who had careers that included both jobs that contributed to Social Security and jobs that did not contribute to the program. The GPO, on the other hand, cut Social Security benefits for spouses and survivors receiving government pensions. This meant that if someone received a government pension, their Social Security benefits as a spouse or survivor would be cut, often dramatically. 

It is anticipated that this new law would have a significant impact, affecting almost 3 million individuals. Many people whose Social Security benefits were cut or eliminated altogether will now receive larger amounts because of this change. The repealing of the WEP and GPO assures that these people are no longer unfairly penalized for their career choices. The act has significant implications for future retirees, particularly those who have worked in both public and private sectors, as well as their spouses and survivors. The additional inflation-adjusted guaranteed income could significantly impact the financial stability of spouses and survivors. 

Here are some key points to consider: 

  • No More Reduced Benefits: The repeal of the WEP and the GPO means that future retirees who have worked in jobs not covered by Social Security will no longer see their benefits reduced. This is especially beneficial for teachers, police officers, firefighters, and other public sector employees. 
  • Higher Monthly Payments: Higher monthly Social Security benefits would be available to retirees in the absence of reductions imposed by WEP and GPO, giving them a more stable source of income in retirement. 
  • Equitable Benefits: The elimination of the act permits people who worked in both Social Security-covered and non-covered jobs to potentially receive more in benefits. This is a substantial stride forward, as it eliminates the penalties that previously impacted individuals who dedicated a portion of their careers to public service. 
  • Spousal and Survivor Benefits: The repeal of the GPO is particularly impactful for spouses and survivors. They will now receive full Social Security benefits without reductions due to receiving a government pension. 
  • Retroactive Payments: For those who were previously affected by WEP and GPO, the Social Security Administration (SSA) will provide retroactive payments. Individuals will receive a lump sum covering the benefits they missed out on since January 2024. But it’s not automatic for all; you may need to apply. Check with the Social Security Administration to determine your eligibility. 
  • Public Sector Recruitment: The repeal of these provisions may have a positive impact on public sector recruitment. Knowing that Social Security benefits will not be reduced might encourage more workers to pursue careers in public service. 

In summary, the Social Security Fairness Act of 2025 represents a significant improvement in the retirement landscape for public sector employees and their families.