There are significant changes anticipated for Social Security benefits this year, which will affect millions of Americans nationwide. Recent legislation, including the Social Security Fairness Act, aims to address longstanding disparities faced by public employees and their families. This adjustment, along with a new cost-of-living adjustment (COLA), is set to significantly impact the financial landscape for retirees who rely solely on these benefits.
Signed into law on January 5, the Social Security Fairness Act represents one of Joe Biden’s last major actions, aiming to support over 3.2 million people. This legislation seeks to remedy past reductions in benefits caused by certain provisions. The act abolishes two major provisions: the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). Previously, these rules had diminished or eliminated Social Security payments for individuals receiving pensions from jobs not covered by Social Security taxes.
Benefits of the Social Security Fairness Act
Among President Joe Biden’s final actions before leaving office in January was the passing of the Social Security Fairness Act. Millions of retired Americans, including teachers, firefighters, and police officers, can expect substantial increases in their monthly benefits. This bipartisan legislation eliminates the GPO and WEP, both of which had previously reduced the Social Security benefits for retirees who earned pensions from non-covered employment.
In addition to qualifying for larger payments moving forward, the 3.2 million Americans affected by the repeal of the WEP and GPO will also be entitled to back benefits if they claimed Social Security before the enactment of the new law. The exact increase in benefits will vary based on the individual’s earnings history, the type of benefits received, and the reductions previously imposed by the WEP or GPO. While some may notice no change, others could receive an additional $1,000 or more each month.
What is the Social Security Fairness Act?
Passed in January 2025, the Social Security Fairness Act tackles the longstanding issues associated with the GPO and WEP. Introduced in the 1980s, these regulations affected employees who received pensions from jobs that do not contribute to Social Security. Originally designed to reduce Social Security payouts for those with non-covered pensions from public jobs, such as in education, law enforcement, and firefighting, these provisions resulted in unfairly low benefit amounts for many public sector workers.
Fortunately, the recently enacted Social Security Fairness Act abolishes these clauses, ensuring that retirees who served in government jobs without paying into Social Security will now obtain the full benefits they are entitled to.
Repeal of WEP and GPO: New Opportunities for Public Employees
The Social Security Fairness Act, which took effect on January 5, 2025, marks a significant shift in how Social Security benefits for certain public employees are calculated. The legislation repeals the GPO and WEP, which previously diminished payments for individuals receiving pensions from jobs not covered by Social Security.
As a result, retirees under the Civil Service Retirement System (CSRS) and CSRS Offset are expected to see substantial increases in their monthly benefits. According to the Congressional Budget Office (CBO), the WEP repeal could lead to an average monthly boost of approximately $360, while couples impacted by the GPO might experience increases around $700. Survivors could see a monthly rise of as much as $1,190. To facilitate the smooth processing of these changes, beneficiaries should ensure their information with the Social Security Administration is up-to-date, as retroactive payments are expected to commence in 2025.
2025 COLA: A Complicated Scenario for Recipients
In conjunction with these legislative reforms, the 2025 COLA adjustment for Social Security and Supplemental Security Income (SSI) is set at 2.5%. With inflation continuing to be a significant concern, this increase is designed to assist beneficiaries in coping with rising living costs. This new COLA began to take effect for approximately 68 million Social Security participants in January 2025, with SSI increases commencing on December 31, 2024.
However, many retirees have expressed concerns that their Social Security benefits may still fall short of covering essential expenses, with a striking 96.5% of recipients indicating that the 2025 COLA is insufficient to counter the effects of rising inflation.
How Much Will Benefits Increase?
The Congressional Budget Office (CBO) estimates that the removal of these restrictions will result in monthly increases in Social Security benefits ranging from $360 to $1,190. The specific increase will depend on the individual’s pension amount and work history. The law also allows for retroactive lump-sum payments, covering benefit increases for payments due starting January 2024—ensuring that eligible individuals will receive the funds they were owed.
The Social Security Administration (SSA) has begun implementing procedures to assist those affected by the new law. While a definitive timeline for when all affected beneficiaries will see their increased benefits in their payments has not yet been provided, the SSA is actively working to adjust payments accurately.
This legislative change resolves disparities that previously led many Social Security recipients to receive lower benefits than warranted, offering much-needed financial relief to millions of retirees and public employees. Individuals who believe they may qualify for enhanced benefits should stay informed with official SSA updates to ensure they receive the benefits rightly due to them.
Samarth Choudhary is a Chief Editor at keralacobank.com. With a decade of experience in online media, he graduated from the University of California and earned a Master’s in Finance from the University of Dallas in 2010. His primary interests and expertise lie in Finance, Taxes, and Government Aid & Schemes. Samarth focuses on delivering relevant and straightforward information to users through keralacobank.com.
