Benefit enhancements for Social Security retirees: Larger payments set to be distributed to approximately 3.2 million individuals in April
In a groundbreaking move, former President Joe Biden signed the Social Security Fairness Act into law on January 5, 2025. This act notably repeals two pre-existing provisions, namely the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which had previously led to reduced or eliminated benefit payments for approximately 3.2 million public-sector employees.
Understanding the Social Security Fairness Act
The Social Security Fairness Act is a game-changer for millions of retirees, spouses, and survivors. It abolishes two preexisting rules, the WEP and GPO, designed to prevent beneficiaries with public pensions from obtaining full Social Security benefits when they didn't pay Social Security taxes on their entire income.
The Windfall Elimination Provision (WEP) reduced or eliminated retired-worker benefits for individuals who concurrently held public-sector jobs off-limits to Social Security taxes and other jobs covered by Social Security taxes. Similarly, the Government Pension Offset (GPO) reduced or eliminated spousal benefits and survivors benefits for individuals who held public-sector jobs that weren't subject to Social Security taxes.
The WEP and GPO impacted a broad spectrum of government workers, including police officers, teachers, and firefighters, at the local, state, and federal levels. This year, the Congressional Research Service estimate suggested that:
- The average affected retired worker could receive an additional $360 in monthly benefits.
- The average impacted spouse might gain an extra $700 in monthly benefits.
- The average affected widow(er) could receive an additional $1,190 in monthly benefits.
Notably, the Social Security Fairness Act, although recently enacted, triggers these changes to Social Security benefits as early as January 2024. This means beneficiaries may be eligible for retroactive payments in addition to larger future payouts.
Anticipated Adjustments to Social Security Payments
On February 25, the Social Security Administration (SSA) released their timeline for implementing the Social Security Fairness Act.
Retroactive benefit payments, covering January 2024, will bolster the accounts of beneficiaries in form of a lump sum payout. This disbursement is expected to commence by the end of March, reaching most affected persons directly in their bank accounts. Incidentally, try to manage expectations, as the retroactive payments may arrive before the mailed notice clarifying these payments.
In the meantime, millions of Americans will also witness a permanent boost in monthly Social Security income. The substantial increases will arise in April, coinciding with updated benefits based on each beneficiary's unique circumstances, such as lifetime income and public pension amounts.
As a reminder, the SSA advises, "Beneficiaries should wait until April to inquire about the status of their retroactive payment, as these payments will phase-in across March. Beneficiaries should also avoid contacting the SSA before receiving their April payment to discuss their monthly benefit amounts."
[1] Source: Social Security Administration Website[2] Source: AARP[3] Source: National Service Center for Social Security and Disability Strategies[4] Source: National Academy of Social Insurance[5] Source: Congressional Research Service
- With the repeal of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) by the Social Security Fairness Act, many retirees, spouses, and survivors can expect to receive more money from their Social Security benefits.
- The Social Security Fairness Act is expected to provide an average additional $360 in monthly benefits for affected retired workers, $700 for affected spouses, and $1,190 for affected widows(ers).
- The act also triggers changes to Social Security benefits as early as January 2024, which means some beneficiaries may receive retroactive payments in addition to larger future payouts.
- Under the act, the Social Security Administration (SSA) plans to make retroactive benefit payments in the form of lump sum payouts to most beneficiaries by the end of March 2024, although individuals should wait until they receive their April payment before inquiring about their retroactive payment status.
