In January, President Biden signed the Social Security Fairness Act into law, which ends the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). This change is significant for people whose Social Security benefits are reduced by a government pension from work where Social Security taxes were not collected.
A Brief, High-Level Summary of the Past
The Social Security retirement calculation prioritizes providing a higher percentage payment to lower working wages. As someone’s wages increase closer to the maximum wage base, the retirement payout percentage is reduced. See below.
Average Indexed Monthly Earnings (AIME) & Multiplier to Calculate SS Income (PIA)
| AIME | Multiplier |
| $0 – $1,226 | 90% |
| $1,226 – $7,391 | 32% |
| $7,391+ | 15% |
In the late 70’s and early 80’s the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) were introduced to reduce SSA benefits for people who had access to a pension from non-covered work, like teaching, where SSA taxes were not deducted. However, unintended consequences occurred over time, such as reduced Spousal Benefits, providing inaccurate projections during one’s final working years, etc.
What Changes?
With the elimination of the WEP and GPO, a reduction in benefits due to “non-covered” work will no longer exist. This may affect high-income earners’ spouses, Federal employees, teachers, firefighters, police officers, etc. For some, it may be a few hundred dollars per month; for others, it may be a few thousand. The law is retroactive to January 2024 – most believe that those affected should expect to receive a check for backdated payments and an increase in monthly payments… at some point in the future.
What Should Affected People Do?
First, we strongly suggest reviewing how this change may affect your Social Security income for both spouses. A full review is a good recommendation. In general terms, however…
- If you have not filed for Social Security benefits… The current general belief is that you may need to go ahead and file immediately for benefits, so long as you have benefits available from covered work. Filing for benefits is a personal decision, and all options should be considered before rushing to apply. Specifically, if you are between 62 and 70, make sure this decision makes the most sense for your situation.
- If you have already filed for Social Security benefits and are receiving a reduced benefit… Make sure that the Social Security Administration has your correct contact information and direct deposit information. The current understanding is that the payments will be automatically changed at some point in the future, but this has NOT been confirmed by the SSA yet.
- If you have not filed for Spousal Benefits, now is a good time to consider how these changes may affect your family’s SS strategy.
- If you are receiving Spousal Benefits from a Deceased/Divorced Spouse, you may need to consider whether their benefits were reduced due to a non-covered government pension.
Social Security is a complex system with decisions that last a lifetime and a spouse’s lifetime. We encourage anyone impacted by this to contact us, and we can help ensure the best decisions are made. Before simply taking the extra cash flow, let’s review the broader plan.
The Social Security Administration is still determining how to implement these changes. The most updated information is in the link below.
Social Security’s Q&A – Last updated February 3, 2025
https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html
