If you are a current or former public sector employee or a survivor, spouse, or ex-spouse of one, you might be eligible for increased Social Security benefits due to new federal legislation. The Social Security Fairness Act has repealed two longstanding federal laws that have historically reduced or even eliminated Social Security benefits for individuals with pensions who have worked in jobs that didn’t contribute to Social Security at some point in their careers.
Thanks to this change, millions of recipients could see an average increase of $360 more per month for life. Working with a financial advisor can be invaluable in helping 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, marking a significant shift in the landscape of retirement benefits. This act enhances the ability of millions of retirees to claim government retirement benefits. It achieves this by repealing two laws that were put in place over 40 years ago, which had limited benefits for those covered by pensions and who had worked in jobs that didn’t pay Social Security taxes.
Impact of the New Law on Social Security Benefits
This legislation represents a crucial step forward, potentially increasing the financial security and quality of life for many retirees and their families.
The recent repeal of two significant laws, the Windfall Elimination Provision (WEP) from 1984 and the Government Pension Offset (GPO) from 1977, marks a transformative 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—positions that offered pensions but did not deduct Social Security taxes.
With the enactment of the new legislation, millions are now eligible for either new benefits or increases to their current payouts. According to a statement by Biden, the typical benefit enhancement will amount to an average of $360. Notably, these increases are retroactive to 2024, meaning that qualifying retirees might receive a lump sum payment compensating for the benefits they missed under the previous law.
Changes in Retirement Strategies
The introduction of the Social Security Fairness Act is poised to alter some retirees’ approaches to claiming benefits. A significant outcome is the anticipated rise in benefit filings among individuals whose payments had previously been nullified by the GPO.
Without any financial gain from filing, many of these individuals had abstained from applying for Social Security. Now, with the prospect of receiving payments, it’s expected that a considerable number will proceed with the necessary paperwork.
