On January 5, 2025, former President Biden signed the Social Security Fairness Act, expanding Social Security benefits for millions of retired public service workers, enabling teachers, firefighters, police officers and others who receive pensions to also receive full benefits.
In 1935, President Franklin D. Roosevelt signed the Social Security Act into law. This law established a federal safety net that provided benefits to retirees over 65, funded by lifetime payroll tax contributions. But a later provision of the law, enacted in the 1970s, prevented public service workers who receive pensions from also receiving full Social Security benefits.
On December 21, 2024, the Senate and the U.S. House of Representatives passed the bipartisan Social Security Fairness Act (SSFA) that requires the agency to adjust benefits for more than three million people, including calculating retroactive payments and future benefits.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The new law is expected to result in an average monthly increase of $360 for more than 2.5 million recipients of Social Security. Former President Biden also stated that the beneficiaries will be compensated retroactively for 2024, receiving a lump sum worth thousands to make up for the lower benefits paid out last year.
Unfortunately, these beneficiaries may have to wait up to a year or longer to reap the benefits of the recently passed Social Security Fairness Act, according to the latest development. (Read our story here).
Social Security Fairness Act's Benefit Payment Increases Could Be Delayed For a Year
On Friday, the Social Security Administration announced that the beneficiaries of the new Social Security Fairness Act may have to wait a year or longer to receive their increased Social Security benefits.
At the time of the signing, Biden said that more than two million Americans were to receive a lump sum payment of thousands of dollars to make up for the shortfall in the benefits they should have gotten in 2024. And that: "they’re going to begin receiving these payments this year.”
While that was the intention, it has ultimately proven more difficult than anticipated, due to issues both administrative and bureaucratic. Although the law accounted for retroactive payments and future benefits, it did not allocate additional funding or personnel to assist with its enactment or manage the resulting increase in workload, the Social Security Administration (SSA) pointed out in a recent update.
Although President Trump supported the legislation, it will fall to his administration to make the new law a reality. This could prove challenging, in part because of the rushed legislative process that brought the new law into effect.
What is the Social Security Fairness Act?
The Social Security Fairness Act of 2023, also known as H.R. 82, amends Title II of the Social Security Act by repealing the Government Pension Offset (GPO), enacted in 1977, and the Windfall Elimination Provision (WEP), enacted in 1983,
The WEP reduces Social Security benefits for workers who receive government pensions not covered by Social Security. The GPO is similar to WEP except that it affects the spousal and survivor benefits of someone receiving a non-covered pension.
Together, the GPO and WEP have historically prevented nearly three million former public service workers who receive pensions, like teachers, firefighters, police officers, postal workers and others, along with their spouses, from getting their full Social Security benefits each month.
The thought behind the two provisions was that if someone received a government pension they shouldn't also receive Social Security benefits under the same formula as a retiree with no similar pension. The Social Security Fairness Act repeals both measures.
Who is impacted by the Social Security Fairness Act?
More than 51 million retired workers received a Social Security check in August 2024.
The Social Security Fairness Act is meant to expand Social Security benefits for the nearly three million Americans who received public pensions. Workers impacted include those who worked in a public sector job and/or received a pension through public employment.
This provision will impacts state and local government employees who have worked a job(s) that required employees to pay into Social Security. Former public service workers should see a boost in their benefits now that the bill is signed into law. Sadly, this increase in benefits may now be delayed for a year or more.
Politics and the Social Security Fairness Act
The law has been long in the works, with the Senate first holding hearings on the policies in 2003. The U.S. House of Representatives ultimately voted to pass the Social Security Fairness Act on November 12, 2024. On Saturday, December 21, 2024, just after midnight, H.R. 82 passed the Senate. It headed to the White House on Sunday, Jan. 5, 2025, and was signed into law by former President Biden.
The years of debate related to concerns about how a repeal might impact Social Security's waning funds. Democrats uniformly voted for the measure to pass. However, Republicans in the Senate were split evenly, with 20 voting for the bill and 20 voting against it. Republicans who spoke out against the bill worried that the measure would accelerate Social Security’s projected insolvency by about six months. Senate supporters of the bill argued that while the trust fund shortfall must be addressed, the bill shouldn’t be delayed at the expense of retirees with public pensions.
After approval in the U.S. House in November, Senate approval came at about 12:15 a.m. on Saturday, December 21. According to the Social Security Fairness Act text, now that the bill has been signed into law, the legislation's effective date will apply to benefits payable for months after December 2023.
That means the Social Security Administration (SSA) will now need to hustle and begin issuing large back payments to millions of individuals.
Want more guidance on retirement savings? Sign up for Kiplinger's six-week series, Invest for Retirement.
Related Content
-
Five Tips For Estate Planning in 2025We're almost halfway through the year. Is your estate in order? If not, here are some tips to get it done in 2025.
-
Is it Still a Good Idea to Give Savings Bonds as Gifts?Kiplinger editor explores if it's still a good idea to get savings bonds as gifts for children, looking at their returns and usability.
-
Five Tips For Estate Planning in 2025
We're almost halfway through the year. Is your estate in order? If not, here are some tips to get it done in 2025.
-
How to Access Your Parents’ Medicare: Enroll and Manage Their CareGetting access to your parents' Medicare or Medicare Advantage accounts is easiest when they're healthy. But you still have options if they are incapacitated.
-
Don't Veer Off Course at the First Sign of a Squall in the MarketsWhen markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
-
How Business Owners Can Prepare for a Terminal DiagnosisThe most important thing is readiness, whether the owner faces a life-changing diagnosis or an employee does.
-
Advisers, Take Note: How 2025 Social Security Changes May Impact Your ClientsWhat financial advisers might need to know to help their clients navigate Social Security in 2025.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
The Role of the Dollar in Retirement: Is It Secure?Protect your retirement from de-dollarization, because “capital always goes where it is treated best."
