President Joe Biden has signed legislation that will increase Social Security benefits for public sector employees, such as teachers, firefighters, and police officers. Called the Social Security Fairness Act, this legislation represents the first significant expansion in the system’s benefits in the last two decades, according to the White House.
“This bill ensures that those who have worked hard their entire lives can retire with dignity and financial stability,” president Biden said during the bill signing. In addition, he highlighted the almost 90 years of history of the Social Security system, originally implemented by Franklin Delano Roosevelt.
There might be implications for Social Security trust funds
The legislation passed the Senate after intense debate over the historical inequalities it would correct, although it also raised concerns about the solvency of social security trust funds, which already face risks of depletion. Among the key reforms is the elimination of the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).
Data from the Congressional Research Service indicates that, as of December 2023, approximately 745,000 beneficiaries — about 1% of the total — had their payments reduced due to the GPO, while 2.1 million (3% of the total) were affected by the WEP.
Increase in payments for retirees
An analysis by the Congressional Budget Office (CBO) projects substantial increases in monthly payments for retirees affected by these provisions. By the end of 2025, those impacted by the WEP will receive an average increase of $360 per month. On the other hand, those harmed by the GPO may receive between $700 and $1,190 additionally, depending on their specific situation.
The increases will be subject to regular cost of living adjustments (COLA). In addition, the law provides for retroactive payments from January 2024, which could imply significant administrative changes. However, it is not yet clear how the Social Security Administration will implement these modifications or whether beneficiaries will need to take additional steps.
Maximum Social Security payments in January 2025
For now, and while the new increases in the bill signed by Biden are implemented, the SSA has established a maximum payment of $4,018 for January 2025 for people who began claiming their benefits at full retirement age (FRA).
For people who retired earlier, at age 62, the maximum payment is $2,831 per month, but for those who delayed their retirement until the maximum age of 70, the maximum payment is $5,108. All of these payments are impacted by the 2.5% cost of living adjustment (COLA), applied since January.
To receive this latest higher payment, you must meet three criteria: have waited until age 70 to claim benefits, have worked for at least 35 years, and have had enough income that falls within the maximum taxable limit set by the SSA.
