The Congressional Research Service found that by the end of 2023, more than 2 million Social Security beneficiaries (26,500 in Maine) had their retirement incomes reduced because of two programs: the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). The Social Security Fairness Act, signed into law on Sunday, eliminates this benefit reduction. Senator Collins said "it will take some time for the Social Security Administration to calculate the benefit changes for the 3 million impacted individuals, but she believes the adjustments could happen as soon as April" 2 .
Who Is Affected
All people who have worked at least 40 quarters, or 10 years, and contributed to Social Security are entitled to some benefits. The previous WEP rule impacted when someone switched jobs from one where they contributed to Social Security to one where they contributed only to a pension (ME PERS)for most Maine Public School District Teachers and Public Sector Employees) 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 teaching 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. If you’re a surviving spouse 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.
Q&A: Social Security Fairness Act
Social Security
The Social Security Administration advises that they are working on implementing these changes moving forward. Those who have previously filed for Social Security and are currently experiencing reduced benefits are told to ensure they have updated mailing and direct deposit information, and upcoming changes will be posted on this website moving forward.
Those who haven’t applied for Social Security and are interested in receiving benefits can apply online or schedule an appointment with their local Social Security office.
Personal Planning
Schedule a call to review your personal financial goals with IIS Financial. For those receiving increased income you may want to take a second look at budgeting income expectations for retirement, this could mean the opportunity to retire earlier or withdraw less from retirement accounts than planned.
Schedule a Call Today To Discuss How These Changes Affect You
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 us here at IIS Financial is recommended to optimize new income opportunities.
Sources:
1. Forbes, Who Is Affected By The Social Security Fairness Act And What To Do Next, January 7, 2025.
2. Portland Press Herald, Sen. Collins Celebrates Expansion of Social Security Benefits, January 6, 2025.