Social Security Fairness Act: What It Means for Your Retirement

If you have a pension and have been blocked from receiving your full Social Security benefits, you're in for a significant financial boost. Thanks to new legislation, your full Social Security benefit is now yours—potentially adding thousands, or even hundreds of thousands, of dollars to your lifetime earnings.

On January 5, 2025, President Joe Biden signed the Social Security Fairness Act into law, a landmark change that eliminates long-standing reductions in Social Security benefits for certain retirees. This is a major win for many public sector employees, including teachers, firefighters, and police officers, who were previously impacted by restrictive rules.

Understanding the Windfall Elimination Provision (WEP)

The Windfall Elimination Provision (WEP) was introduced in 1983 as a way to reduce Social Security benefits for individuals who received a pension from an employer that did not withhold Social Security taxes. If you worked for such an employer but also had other jobs where Social Security taxes were withheld, your benefits were unfairly reduced. This meant that all the Social Security contributions you made in those other jobs did not fully benefit you when you retired.

For decades, retirees affected by WEP have argued that this system was unjust, and in 2024, Congress finally agreed. With the passage of the Social Security Fairness Act, WEP has been eliminated, ensuring that your benefits reflect what you earned and contributed over your working years.

The Government Pension Offset (GPO) and How It Impacted Spouses

The new law also eliminates the Government Pension Offset (GPO), another rule that significantly reduced Social Security spousal or survivor benefits for individuals receiving a pension from a non-Social Security-covered job.

Here’s how it worked: Under GPO, your spousal or survivor benefit was reduced by two-thirds of your pension amount. For example, if you had a pension of $1,500 per month, two-thirds of that ($1,000) would be deducted from your Social Security benefit. If your expected Social Security benefit was $1,200 per month, you would have been left with only $200—or in some cases, nothing at all.

This policy left many widows and retirees in dire financial straits. The elimination of GPO means that spousal and survivor benefits will now be paid in full, providing much-needed financial relief to countless retirees.

What This Means for You

The Social Security Fairness Act is retroactive to January 2024, meaning that retirees affected by WEP or GPO will receive back payments for the benefits they should have received since that date. If you fall into this category, this could mean a lump-sum payment as well as higher monthly benefits moving forward.

For many, this law will impact Social Security timing strategies, making it crucial to reassess your retirement plan. If you are now entitled to a larger benefit, you may want to reconsider the age at which you claim Social Security, optimize your withdrawal strategies, and align your pension and Social Security income more effectively.

Next Steps: Planning for a Stronger Retirement

If you’re among the millions of retirees who will benefit from this new law, now is the perfect time to review your retirement plan. If you have questions on how the rule change might affect you, please get in touch with us and we will help you navigate it and create a strategy that helps you maximize your retirement benefits.

This is a historic shift in retirement policy, and we’re here to help you take full advantage of it. Let’s build a more secure and prosperous retirement together!

Check out our YouTube video explainer: “How Pensions NO LONGER Affect Social Security. WEP and GPO Eliminated!”

This commentary reflects the personal opinions, viewpoints and analyses of the Seaside Wealth Management, Inc. employees providing such comments, and should not be regarded as a description of advisory services provided by Seaside Wealth Management, Inc. or performance returns of any Seaside Wealth Management, Inc. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Seaside Wealth Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.