New federal legislation may increase Social Security benefits for current or former public sector employees, as well as their survivors, spouses, or ex-spouses. The Social Security Fairness Act repeals two federal laws that previously reduced or eliminated Social Security benefits for pensioners who worked in non-contributory jobs.
This change could result in an average monthly increase of $360 for millions of recipients over their lifetime. Working with a financial advisor can help you project your potential Social Security benefits and plan effective claiming strategies.
Retirees Celebrate Retroactive Social Security Payments for 2024
On January 5, 2025, President Joe Biden signed the Social Security Fairness Act into law, signaling a significant shift in the retirement benefits landscape. This act improves the ability of millions of retirees to receive government retirement benefits.
It accomplishes this by repealing two laws enacted over 40 years ago that limited benefits for those receiving pensions and working in jobs that did not pay Social Security taxes.
Impact of the New Law on Social Security Benefits
This legislation represents a significant step forward, with the potential to improve the financial security and quality of life for many retirees and their families.
The repeal of two significant laws, the Windfall Elimination Provision (WEP) from 1984 and the Government Pension Offset (GPO) from 1977, is a watershed moment in Social Security legislation.
Initially, these laws aimed to bolster Social Security funding by curbing benefits for individuals who spent parts of their careers in government, religious, and non-profit roles. These positions offered pensions but did not deduct Social Security taxes.
The new legislation allows millions to receive new benefits or increase their current payouts. Biden stated that benefit enhancements typically cost around $360.
These retroactive increases may provide qualified retirees with a lump sum payment to compensate for missed benefits under the previous law, effective 2024.
Changes in Retirement Strategies
The Social Security Fairness Act is expected to change how retirees claim benefits. A significant outcome is the expected increase in benefit filings among individuals whose payments were previously nullified by the GPO.
Many people did not file for Social Security because they did not benefit financially from doing so. With the prospect of receiving payments, it is expected that a large number will complete the necessary paperwork.
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