The Congressional Research Service found that as of the end of 2023, over two million Social Security beneficiaries had their retirement incomes reduced due to two programs: the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). The Social Security Fairness Act was signed into law on January 5th, 2025 and eliminates this benefit reduction. This article outlines who is affected by this change and actions to take next.
Who Is Affected
All people who have worked at least 40 quarters, or 10 years, and contributed to Social Security are entitled to some level of benefits. The previous WEP rule impacted when someone switched jobs from one where they were contributing to Social Security to one where they contributed only to a pension and not Social Security.
For example, let’s say you worked in a high-earning executive role for 25 years and opted to transition to teach for the last 15 years of your career before you retire. Under the prior rules, your Social Security benefit based on those 25 years of work would shrink based on your pension income from the last 15 years of work. Because of this, many teachers I’ve known have felt fearful about meeting their post-retirement expenses even though they’ve done the work to contribute to both systems.
The GPO affected a smaller group of people because it was specific to surviving spouses receiving benefits after the death of the original recipient. In this case, Social Security benefits were reduced by two-thirds of the government pension amount. This means if you’re a surviving spouse who is supposed to receive a $3,000 Social Security benefit and a $3,000 pension benefit, your Social Security payment would be reduced to $1,000 per month.
Luckily, Social Security is working to resolve this issue.
Actions To Take
If you or someone you love is affected by the changes put forth by this act, there are a few actions they may need to take.
Social Security
The Social Security Administration advises that they are working on implementing these changes moving forward. For those who have previously filed for Social Security and are currently experiencing reduced benefits, they are told to ensure they have updated mailing and direct deposit information and upcoming changes will be posted to this website moving forward.
For those who haven’t applied for Social Security and are interested in receiving benefits, they can apply online or schedule an appointment with their local Social Security office.
Personal Planning
For the millions of people who will be receiving increased income, you may want to take a second look at budgeting and income expectations in retirement. This could mean the opportunity to retire earlier than planned or a previously unfeasible move is now possible. Consider working with a qualified financial professional to map out your financial goals and put these changes into perspective.
Conclusion
The Social Security Fairness Act addresses previous inequalities caused by the WEP and GPO, impacting over two million beneficiaries. Beneficiaries should ensure their contact information is current with the Social Security Administration and stay informed about updates regarding implementation. Additionally, reviewing retirement goals with a financial advisor is recommended to optimize new income opportunities.
This informational and educational article does not offer or constitute, and should not be relied upon as, tax or financial advice. Your unique needs, goals and circumstances require the individualized attention of your own tax and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its associates and affiliates do not provide tax or legal advice or services. Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) and its affiliates do not endorse, approve or make any representations as to the accuracy, completeness or appropriateness of any part of any content linked to from this article.
Cicely Jones (CA Insurance Lic. #: 0K81625) offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN) and offers annuity and insurance products through Equitable Network, LLC, which conducts business in California as Equitable Network Insurance Agency of California, LLC). Financial Professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. Any compensation that Ms. Jones may receive for the publication of this article is earned separate from, and entirely outside of her capacities with, Equitable Advisors, LLC and Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC). AGE-7501042.1 (1/25)(exp. 1/29)
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