Millions of Americans celebrated after former President Joe Biden signed a new law that would increase Social Security benefits for around 3.2 million retirees and spouses. Social Security is an important and sensitive topic for many, especially since it affects millions of people and has ongoing financial challenges. This has led to a lot of disagreement among political parties.
Because of this, getting bipartisan support for Social Security bills isn’t easy, so the passage of the Social Security Fairness Act was seen as a positive step. However, retirees who are about to benefit from the law recently learned that there is an unexpected downside to the new changes.
The Social Security Fairness Act is a major update to the Social Security program, which is already quite complex with rules about who can claim benefits, when, and how much. One of the biggest changes the law brings is the elimination of two provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
WEP has long limited Social Security benefits for retirees who not only qualify for Social Security but also receive a pension from their employer that doesn’t take out Social Security taxes from their salary. The goal of WEP was to prevent individuals with non-covered pensions from receiving higher benefits. WEP mainly applied to state and local government workers, federal employees, and teachers. In 2022, it affected over 2 million Americans.
Similarly, GPO impacted spouses or widows/widowers who received non-covered pensions. In 2022, more than 734,000 people, or about 12.6% of Social Security spousal beneficiaries, were affected by GPO. Now, with WEP and GPO gone, retirees will see different changes based on their personal situations, such as the amount of Social Security benefits and pensions they’re entitled to.
Experts predict that eliminating WEP and GPO could increase some retirees’ benefits by up to $1,000 a month. This is a huge deal, especially considering that the average monthly benefit for retirees was around $1,926 as of December 2024, and benefits have already gone up by 2.5% this year.
However, there’s a catch. Retirees who are affected by WEP and GPO may have to wait over a year before they can claim their higher benefits from the Social Security Administration (SSA). The SSA recently explained on its website that it is struggling to implement the changes quickly. This is because the law didn’t include funding for the actual process of updating the system, which is more complicated than it may seem.
The SSA now needs to recalculate benefits for more than 3 million people. The law also requires the SSA to adjust benefits retroactively, starting from January 2024, which makes the task even more challenging. The agency is working on it, but it also faces staffing shortages and a hiring freeze that began last November and is expected to continue.
Retirees affected by WEP and GPO should be careful with their budgets because they might not know how much their benefits will increase just yet. The SSA has made it clear that it will handle this on a case-by-case basis, and while some people might see a big difference, others may not see much change at all.
Additionally, many spouses who may not have applied for Social Security benefits due to concerns over GPO might now be able to do so. If you received a non-covered pension, you may be eligible for Social Security benefits that could increase your retirement income.
There’s also a little-known opportunity for retirees that many overlook. If you’re behind on your retirement savings, there are certain “Social Security secrets” that could boost your income. For example, one simple strategy could give you an extra $22,924 each year. By learning how to maximize your Social Security benefits, you might be able to retire with greater peace of mind and confidence.
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