What's Happening
1 hour ago

Mark Zuckerberg Follows Elon Musk's Footsteps As Meta Reportedly Plans Major Investment Into AI-Powered Humanoid Robots

benzingabenzinga.com
2 hours ago

Do You Know How Long $1 Million Will Last If You Retire At 65? Here's A Hint – Longer Than You're Led To Think!

benzingabenzinga.com
2 hours ago

IRS Reportedly Gears Up To Lay Off Thousands Of Workers Elon Musk's DOGE Looks To Shrink The Tax Agency

benzingabenzinga.com
2 hours ago

TRADEPULSE POWER INFLOW ALERT: PALO ALTO NETWORKS INC. (PANW) MOVES UP OVER 5% AT ITS HIGH AFTER TRADEPULSE ALERT

benzingabenzinga.com
3 hours ago

Jeff Bezos-Backed Anthropic Fights US Proposal Blocking Google From Investing In AI Startups, Says It Would Benefit Rivals OpenAI, Mark Zuckerberg's M...

benzingabenzinga.com
4 hours ago

Trump Administration 'Unlikely' To Support TSMC's Control Of Intel's US Chip Factories: Report

benzingabenzinga.com
4 hours ago

Trump's 'Liquid Gold' Plan: Can He Really Make America Rich Again, or Do Oil Giants Hold the Real Power?

benzingabenzinga.com
5 hours ago

Elon Musk's Government Gig Has No Salary, No Job Title, And Plenty of Power

benzingabenzinga.com
6 hours ago

Why Altcoins Were Winning This Week

foolfool.com
6 hours ago

Russell Vought Orders Pause On All CFPB Activity, Critics Say This Gives Corporations 'The Green Light To Scam Families'

benzingabenzinga.com
6 hours ago

Prediction: Zillow Will Beat the Market. Here's Why.

foolfool.com
7 hours ago

$1000 Invested In Super Micro Computer 15 Years Ago Would Be Worth This Much Today

benzingabenzinga.com
7 hours ago

'We're Going To Find Billions' – Trump Targets Pentagon For Deep Spending Cuts

benzingabenzinga.com
7 hours ago

Here's How Much You Would Have Made Owning Meta Platforms Stock In The Last 10 Years

benzingabenzinga.com
7 hours ago

If You Invested $1000 In This Stock 15 Years Ago, You Would Have This Much Today

benzingabenzinga.com
7 hours ago

Why Siemens Stock Crept Higher on Friday

foolfool.com
7 hours ago

Here's How Much You Would Have Made Owning Regeneron Pharmaceuticals Stock In The Last 15 Years

benzingabenzinga.com
8 hours ago

This Magnificent Artificial Intelligence (AI) Stock Delivered Stellar Gains in 2024. It Can Jump Another 60%

foolfool.com
8 hours ago

Here's How Much You Would Have Made Owning American Tower Stock In The Last 20 Years

benzingabenzinga.com
8 hours ago

Why Federal Realty Investment Trust Stock Just Tanked by 6%

foolfool.com

A New Social Security Law That Will Boost Benefits for 3.2 Million Retirees Comes With an Unwelcome Surprise

Millions of Americans rejoiced after former President Joe Biden signed a bill into law that will boost Social Security benefits for approximately 3.2 million retirees and spouses. Social Security can be a touchy subject because it impacts tens of millions of Americans and also has many looming financial issues, which has led to partisan disagreement. Needless to say, it’s not easy to get bipartisan support for Social Security bills, so passage of the Social Security Fairness Act was pretty well received. However, retirees slated to benefit just found out that the bill also comes with a bit of an unwelcome surprise.

What is the Social Security Fairness Act?

The Social Security program is very complex and has many rules regarding who can claim benefits, when they can claim benefits, and how much they can claim. The Social Security Fairness Act eliminated two provisions called the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

WEP essentially limited Social Security benefits for retirees who qualified for benefits and also received a noncovered pension, which is an employer-covered pension that doesn’t take out Social Security taxes from someone’s salary. The Social Security program is predicated on workers paying taxes throughout their careers and then receiving benefits once they retire or are nearing retirement. The idea behind WEP was to prevent recipients of noncovered pensions from also receiving higher benefits. WEP typically applied to a select group of state and local municipal workers, federal employees, and teachers. In 2022, WEP impacted over 2 million Americans.

Person sitting in chair and looking outside.

Image source: Getty Images.

GPO is similar to WEP but impacts spouses or widowers who receive noncovered pensions. In 2022, GPO applied to over 734,000 beneficiaries, or roughly 12.6% of those who receive Social Security spousal benefits. Eliminating WEP and GPO will impact retirees differently based on the benefits they are entitled to and the amount they get from noncovered pensions.

However, the Social Security Administration (SSA) estimates that eliminating WEP and GPO could theoretically boost a retiree’s benefits by as much as $1,000 or more per month. That’s quite significant when you consider that the average monthly benefit for retirees in December 2024 was roughly $1,926 per month, and benefits have already risen this year due to the 2.5% cost-of-living adjustment.

The unwelcome surprise

Unfortunately, many retirees impacted by WEP and GPO may need to wait over a year to claim their increased benefits from the SSA. On its website, the SSA recently stated that it will likely struggle to implement the law in a timely manner. That’s because passage of the law did not include funding to actually implement its provisions, which are more complex than meets the eye.

SSA must now recalculate the benefits of over 3 million people. Additionally, the law will require the SSA to adjust benefits retroactively dating back to the beginning of 2024, further complicating the process. The agency noted that it has begun to work through the process and assist retirees. However, the SSA said it is also dealing with staffing shortages and a hiring freeze that went into effect last November and is expected to continue.

Retirees who have been impacted by WEP and GPO should be cautious on adjusting their budgets because they likely will not yet know by how much their benefits could increase. The SSA has made it clear that it’s on a case-by-case basis and that while some might benefit immensely, others may not see much of a change at all.

Additionally, it’s possible that many spouses never applied for Social Security benefits in the first place due to concerns over GPO. If you received a noncovered pension, you may now be able to apply for and receive Social Security benefits that will increase your retirement income.

The $22,924 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

View the “Social Security secrets” »

The Motley Fool has a disclosure policy.

Related Posts

Social Security is an essential piece to most American’s retirement plans. Without their monthly benefits, some 16.3 million seniors U.S, would be living below the

The average retirement age in the U.S. was 62 in 2023, but that number’s been slowly ticking up over time. Rising life expectancies and rising

While the stock market is still thriving, some investors may be feeling wary about the future. Spiking inflation could cause the Federal Reserve to shift

There are plenty of ways to become a millionaire, like starting a successful business, being a professional athlete, or becoming a movie star. For most