Social Security’s 2025 cost-of-living adjustment (COLA) bumped the average benefit from $1,927 per month to $1,976 per month. It’s a $49 increase, but many hoped for more. Despite slowing inflation, some retirees still find it difficult to make ends meet, particularly when they don’t have a lot of personal savings.

A new bill headed for President Biden’s desk will make life a little easier for approximately 2.8 million Americans on Social Security. Here’s what you need to know.

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The Senate recently passed the Social Security Fairness Act

The Senate passed the bipartisan Social Security Fairness Act on Dec. 21, 2024. The bill, which had already passed the House, now heads to President Biden, who will most likely sign it into law before his term ends.

The bill would eliminate two key Social Security provisions: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The WEP reduces the Social Security benefits available to some retired workers who claim government pensions from jobs where they didn’t pay into Social Security during their careers. The GPO does something similar for spousal and survivors benefits of workers with these non-covered government pensions.

The bill would retroactively remove these provisions for all benefits issued after December 2023. This would mean all 2.01 million retired workers and more than 734,000 spouses affected would receive larger Social Security benefits going forward. They’d also receive back pay for the benefits they received after December 2023 and before the law went into effect. But right now, it’s unclear when the affected beneficiaries would actually receive this extra money.

It would be a boon to millions of families that include former police officers, firefighters, teachers, and other government workers. But while the bill passed with a majority of 76 senators in favor, it’s not without its detractors.

The downside to the Social Security Fairness Act

The Social Security Fairness Act’s short-term results would be nothing but positive for the 2.8 million affected beneficiaries. Those who don’t fall into this category wouldn’t notice any change to their benefits, but they wouldn’t be any worse off — at least, for now.

The problem comes a few years later, when Social Security’s trust funds are depleted. A Congressional Budget Office report estimates that, prior to the introduction of this bill, the trust funds would have been depleted in about 2034. Without reform, the government would have to slash all Social Security benefits by 23% in 2035.

Passing the Social Security Fairness Act is likely to increase Social Security’s spending by nearly $196 billion. That’s enough to accelerate the trust fund depletion date by about six months.

It might not seem like a big deal to you, but it is significant. The government has been aware of Social Security’s funding issues for years, and so far, no proposed resolution has managed to gain traction, in part because there aren’t any desirable solutions. The government will have to increase Social Security taxes on workers, reduce benefits for retirees, or both. The closer we get to the depletion date, the fewer options we’ll have.

If this is something you feel strongly about, reach out to your Congresspeople and make your feelings known. You may also want to keep an eye on this issue as we move into the new year. We’re likely to hear more and more about Social Security’s funding crisis as we inch closer to the 2034 deadline.

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