Social Security Fairness Act: Important Changes to Your Benefits
Clarissa Hobson, CFP®, Michael Meador
The Social Security Fairness Act (SSFA), signed into law on January 5, 2025, eliminates two long-standing provisions that reduced Social Security benefits for public service workers and their families. This change results in increased benefits for over 2.75 million Americans, with an average monthly increase of $360 per recipient.
Who is Affected?
You may be eligible for increased benefits if you are:
- A current or former public service employee (such as a teacher, firefighter, police officer, or other government worker)
- A family member of a public service employee who receives Social Security benefits
- Someone whose Social Security benefits were previously reduced or eliminated by the Windfall Elimination Provision (WEP) or Government Pension Offset (GPO)
Understanding the Changes
Prior to the SSFA, two provisions significantly impacted public service workers’ Social Security benefits:
The Windfall Elimination Provision (WEP) reduced Social Security benefits for workers who earned pensions from jobs not covered by Social Security, such as government positions or work in foreign countries.
The Government Pension Offset (GPO) affected spouse or widow(er) benefits for people who worked in government jobs not covered by Social Security. This provision often reduced or eliminated their Social Security benefits entirely.
The SSFA repeals both provisions, resulting in higher benefits for affected individuals and their families.
What You’ll Receive
Benefit increases will vary based on your employment history and previous benefit calculations. Here’s what to expect:
Increased Monthly Benefits
- Average increase: $360 per month
- Payments will be automatically adjusted for current recipients
- New benefit amounts will reflect your full earned Social Security benefit
Retroactive Payments
- Coverage begins January 2024
- Lump sum payment will include all additional benefits owed from January 2024
- The Social Security Administration will calculate and distribute these payments automatically
Real-World Example: Understanding the Impact
To illustrate how the SSFA might affect a typical household, consider this scenario:
The Sample Family:
- John (age 70): Currently receiving Social Security benefits
- Susan (age 61): Planning for future benefits
Susan’s Situation:
- 22 years of Substantial Earnings under Social Security
- Eligible for Colorado PERA pension: $8,500/year starting 2026
- Planning to claim Social Security at age 70
Financial Impact:
Before SSFA: $21,500 annual Social Security Benefit
After SSFA: $27,215 annual Social Security Benefit (additional $5,715 annually / $476 monthly)
Lifetime Benefit Increase: $132,000[1]
Important Tax Considerations
The increase in benefits and retroactive payments may affect your tax situation:
- Higher monthly benefits may change your taxable income
- Lump sum retroactive payments could temporarily push you into a higher tax bracket
- You may need to adjust tax withholding on your Social Security benefits
- State tax implications may vary depending on your location
Taking Action
Current Benefit Recipients:
No action is required. The Social Security Administration will automatically adjust your benefits and issue any retroactive payments owed.
New Applicants:
If you were previously ineligible for benefits due to WEP or GPO, you can now:
- Apply online at www.ssa.gov
- Schedule an appointment by calling 800.772.1213
Stay Informed
The Social Security Administration is currently finalizing implementation details. For the most up-to-date information:
- Visit www.ssa.gov/benefits/retirement/social-security-fairness-act.html
- Ensure your contact and direct deposit information is current at www.ssa.gov
- Watch for official communications from the Social Security Administration
How We Can Help
Understanding these changes and their impact on your retirement planning is crucial. Your Transform Wealth advisor can help you:
- Calculate your expected new benefit amount
- Adjust your retirement income strategy
- Plan for tax implications
- Update your financial plan if applicable
Contact your Transform Wealth advisor to discuss how these changes affect your specific situation and what adjustments might be beneficial for your financial future.
Note: This information is current as of January 2025. Implementation details may change as the Social Security Administration finalizes its procedures. This document is for informational purposes only and does not constitute tax advice. Transform Wealth does not provide tax advice so we encourage you to consult with a tax professional to ensure your unique needs are considered.
[1] Illustrations created using Maximize My Social Security software. All figures in today’s dollars. Actual benefits will be adjusted for inflation and may vary based on individual circumstances and future COLA adjustments.