The Social Security Fairness Act: What It Means for Your Retirement
What is the Social Security Fairness Act?
On January 5, 2025, President Biden signed into law the Social Security Fairness Act, a bipartisan bill that amends the Social Security Act for benefits payable after December 2023. This legislation is a game changer for many public sector employees, retirees with certain types of pensions, and individuals who have worked in other countries. Below, we’ll break down the key points of the new law, explain how it might boost your monthly benefits, and outline the steps you can take to make sure your retirement plan is on track.
What Is the Social Security Fairness Act?
The Social Security Fairness Act eliminates two significant provisions in the old Social Security framework:
Windfall Elimination Provision (WEP)
Government Pension Offset (GPO)
Before the Act, these provisions reduced or offset Social Security payments for those receiving pensions from employers who did not withhold Social Security taxes (often found in many state, local, or federal government jobs).
How Did the WEP Affect Benefits?
Reduced Retirement Benefits: Individuals who worked in positions that did not pay into Social Security typically had their retirement or disability benefits reduced under the WEP.
Commonly Impacted Occupations: Teachers, firefighters, police officers, and public employees were disproportionately affected.
Potential 2025 Increase: With the WEP repealed, some beneficiaries could see their Social Security payments rise by as much as $613 per month.
Windfall Elimination Provision (WEP)
The WEP was designed to adjust Social Security retirement and disability benefits for individuals who worked for an employer that did not withhold Social Security taxes from paychecks. This often applied to:
Teachers
Firefighters
Police officers
Other public sector employees
Retirees who earned pensions from foreign employment
Because these workers paid little (or nothing) into the Social Security system, the government applied the WEP to reduce Social Security benefits. The Social Security Administration (SSA) estimated that about 3% of beneficiaries were affected. With the WEP now repealed, individuals impacted may see up to a $613 monthly increase in 2025.
Government Pension Offset (GPO)
The GPO affected survivor or widow(er)’s benefits for those who receive a pension from a federal, state, or local government based on work not covered by Social Security. Specifically, the GPO reduced one’s Social Security benefit by two-thirds of the amount of the public pension — occasionally reducing it to $0. Approximately 1% of retirees were impacted by the GPO. With the repeal of the GPO, many beneficiaries will see a significant increase in their survivor or widow(er)’s benefits.
When Will Benefit Increases Take Effect?
The Social Security Administration (SSA) is currently evaluating how to implement these changes. While it may take time to finalize all the details, the SSA is likely to issue a lump-sum distribution for those impacted, retroactive to January 2024. This lump sum would compensate beneficiaries for any missed increases since the law went into effect.
Tip: If you’re expecting a retroactive check, make sure to coordinate with your tax professional. Lump-sum benefits could affect your taxable income, and you may owe federal and/or state taxes on that one-time payout.
How Falcon Wealth Planning Can Help
Navigating the Social Security Fairness Act can be complicated, especially when it comes to understanding how these changes interact with your overall retirement and tax strategy. At Falcon Wealth Planning, our team of financial planners is here to:
Evaluate your current Social Security benefit status.
Project how the elimination of the WEP and GPO could impact your total retirement income.
Strategize a cohesive approach that integrates tax implications, retirement accounts, and long-term financial goals.
Get Started Today
If you believe you may benefit from the Social Security Fairness Act or simply want to ensure your broader financial plan is on the right track, Falcon Wealth Planning is ready to help. Connect with us to discuss your specific situation and learn how we can tailor a plan that optimizes your income, reduces your tax burden, and secures your financial future.
Get a free assessment today and let Falcon Wealth Planning be your partner on the road to a confident retirement. We’re committed to helping you make the most of this important Social Security update—so you can focus on enjoying the retirement you’ve worked so hard to achieve.
*The content in this blog is for general informational purposes only and does not constitute personalized financial, investment, tax, or legal advice. Falcon Wealth Planning, Inc., a fee-only, true fiduciary, registered investment advisor, provides this information to give a broad understanding of financial concepts and strategies.