Social Security Fairness Act: What It Means for Public Service Professionals
Imagine dedicating your entire career to serving your community—teaching children, keeping neighborhoods safe, or responding to emergencies—only to find out your retirement benefits are unfairly reduced. For millions of public service professionals, this has been a frustrating reality for decades. But now, with the passage of the Social Security Fairness Act, that’s about to change
The passage of the Social Security Fairness Act marks a major milestone for millions of public service professionals across the nation. For decades, many workers who dedicated their lives to serving others—like teachers, police officers, firefighters, and other government employees—faced reduced Social Security benefits due to outdated and unfair provisions. This act, recently signed into law, ends those provisions and ensures that public servants receive the full benefits they’ve earned.
If you’re wondering what this means for you or someone you know, this post breaks down the details of the law, its implications, and how it could improve financial security for retirees in the public sector.
What Is the Social Security Fairness Act?
The Social Security Fairness Act repeals two provisions that have historically reduced Social Security benefits for individuals who also receive pensions from public sector employment. These provisions are the Windfall Elimination Provision (WEP), and the Government Pension Offset (GPO).
Here’s a closer look at what these provisions were and how they worked:
- Windfall Elimination Provision (WEP): This rule reduced the Social Security benefits of public servants who also worked jobs that paid into Social Security. The intent was to prevent “double dipping,” but in practice, it often resulted in unfairly low payments for people who earned their benefits.
- Government Pension Offset (GPO): This rule cut spousal and survivor Social Security benefits for individuals receiving a government pension. In many cases, it left widows and widowers without the financial support they expected.
For decades, these provisions were a source of frustration and financial insecurity for public sector employees, especially as many were unaware of how these rules would change their Social Security income until it was too late. The repeal of these provisions is a step toward fairness for public service professionals who have long been undervalued in the system.
Who Benefits from the Social Security Fairness Act?
The Social Security Fairness Act impacts millions of public servants across the United States. If you’re a retired teacher, firefighter, police officer, or government employee, this legislation could mean a significant boost to your retirement income. For those who’ve worked in roles that kept our communities safe, educated our children, and built a better society, this change is long overdue.
These professionals often spent their careers working in positions that contributed to public pension systems instead of Social Security. However, many of them also worked other jobs where they paid into Social Security, or they qualified for spousal benefits through a partner’s earnings.
The repeal of WEP and GPO ensures that these individuals will now receive their full Social Security benefits, providing much-needed financial relief and security in retirement.
Why Is This a Big Deal?
For those affected by WEP and GPO, the repeal of these provisions could mean a significant increase in monthly Social Security income. This is especially important for public sector retirees, who may rely on a combination of pension income and Social Security to fund their retirement.
Here are a few reasons why this change is so impactful:
- More Income in Retirement: Many retirees will see their Social Security payments increase by hundreds of dollars per month. The Congressional Budget Office (CBO) estimated that by ending the WEP affected beneficiaries would see an increase on average of around $360 per month. Additionally, ending the GPO is expected to increase the monthly benefit for beneficiaries by $700 per month and the surviving spouses receiving a widow / widower benefit by an average of $1,190 monthly. This added income can make a big difference when it comes to covering living expenses, healthcare costs, and enjoying retirement.
- Fairness for Public Servants: Public sector workers have long argued that WEP and GPO unfairly penalized them for their service. The repeal of these provisions recognizes the value of their contributions and ensures they’re treated equitably.
- Financial Security for Spouses and Survivors: By ending GPO, the act restores full spousal and survivor benefits for those receiving public pensions. This is especially important for widows and widowers who were previously left without sufficient income after losing their partner.
A Hypothetical Example
To better understand how the Social Security Fairness Act impacts retirees, let’s take a look at a hypothetical case study using the numbers from the CBO:
Let’s take a look at Mary, a retired firefighter, and her spouse, John.
Mary & John's Situation (Before the Fairness Act):
Mary spent 25 years as a firefighter protecting her community by responding to emergencies day in and day out. Her public pension didn’t pay into Social Security. During her career, she also worked part-time jobs in the private sector, earning Social Security benefits. John worked his whole career in the private sector and earned his Social Security benefits.
Due to the Windfall Elimination Provision (WEP), her Social Security benefits were reduced. Instead of receiving the $800 per month she had earned, WEP cut her benefits down to just $440.
In addition, Mary qualifies for spousal benefits through her husband, John, who worked in a Social Security-covered job and receives $2,800 per month in Social Security. However, under the Government Pension Offset (GPO), Mary’s spousal benefits were reduced by two-thirds of her public pension. As a result, Mary received zero spousal benefits.
Combined, Mary and John’s household was missing out on a significant portion of Social Security income due to these provisions.
Mary & John's Situation (After the Fairness Act):
With the repeal of WEP, Mary will now receive her full earned Social Security benefits, boosting her monthly payment from $440 to $800—an increase of $360 per month.
The repeal of GPO also restores Mary’s spousal benefit. Instead of receiving nothing, she will now qualify for 50% of John’s benefit, adding $1,400 per month to their household income.
The Impact on Their Retirement Income:
- WEP Repeal: Mary’s Social Security benefits increase by $360 per month.
- GPO Repeal: Mary now receives $1,400 per month in spousal benefits.
- Total Increase: Mary and John’s household income increases by $1,760 per month, or $21,120 per year.
This extra income provides Mary and John with more financial flexibility to cover healthcare expenses, travel, and enjoy their retirement years with less stress. It’s a game-changer for their financial security and recognizes the value of Mary’s years of public service.
When Will These Changes Take Effect?
The changes brought about by the Social Security Fairness Act will go into effect starting January 2025 meaning the increased benefits will be reflected in the monthly benefits moving forward. The changes are also retroactive through 2024, but the Social Security Administration (SSA) has not yet made any announcement for how they will be issuing back payments.
The Social Security Administration (SSA) will automatically adjust benefits for those impacted by the repeal of WEP and GPO. This means you don’t need to take any action to receive the increased benefits—they will be applied automatically.
If you’re unsure whether you’re affected or want to confirm how your benefits will be impacted, you can contact the SSA directly or consult with a financial advisor.
What Should You Do Next?
While you don’t need to take any action to receive the increased benefits, it’s always a good idea to stay informed and proactive about your financial situation. Here are a few steps you can take:
- Review Your Social Security Statement: Log in to your Social Security account at www.ssa.gov to review your earnings history and estimate your benefits.
- Plan for the Future: If you’re currently retired or nearing retirement, this is a great time to revisit your financial plan. The increase in Social Security benefits could impact your overall retirement strategy, so make sure your plan reflects these changes.
- Consult with a Financial Planner: If you’re unsure how the Social Security Fairness Act affects you or want to explore ways to maximize your retirement income, consider scheduling a meeting with a financial planner.
Final Thoughts
As a financial planner who specializes in helping public service professionals, I’m thrilled about the positive impact this law will have on many of you who have served your communities throughout the years. Public servants dedicate their lives to serving others, often for less financial reward than private sector employees. This act is a step toward recognizing your contributions and ensuring you have the financial resources you need to retire with confidence.
The Social Security Fairness Act is a long-overdue victory for public service professionals. By repealing WEP and GPO, it restores fairness and financial security for millions of retirees who have dedicated their lives to serving others.
If you’re impacted by this new law, take the time to understand how it affects your benefits and make adjustments to your retirement plan as needed. If you have any questions or need help navigating these changes, I’m here to support you every step of the way.
Let’s work together to ensure you can retire with confidence through clarity.
Eric Mullins, CFP®
Sources:
https://www.newsweek.com/biden-signs-social-security-fairness-act-higher-payments-2010012
