The Social Security Fairness Act: Understanding WEP and GPO Repeal in 2025

On January 5, 2025, now former President Biden signed the Social Security Fairness Act into law, marking a significant change in how retirement benefits are calculated for millions of public sector workers. This major reform affects public sector employees nationwide, with significant implications:

Key Highlights:

• Monthly benefit increases ranging from $360 to $1,190 for affected workers.
• Impacts approximately 2 million WEP (Windfall Elimination Provision) recipients
• Affects nearly 750,000 spouses and widows previously limited by GPO (Government Pension Offset).
• Creates $196 billion in additional benefits over the next decade.
• All changes are retroactive to January 2024.

This new legislation eliminates two long-standing provisions that had previously reduced Social Security benefits for many government employees, including teachers, firefighters, and police officers.

What Changed?

The Act repeals two provisions that have been in place for decades:

1. 1. 1. 1. The Windfall Elimination Provision (WEP), reduced Social Security benefits for approximately 2 million individuals who also receive pension benefits from work where they didn’t contribute to Social Security.
         2. The Government Pension Offset (GPO), affected nearly 750,000 spouses, widows, and widowers who receive their own pensions from public sector work.

Ben Henry-Moreland, Senior Financial Planning Nerd at Kitces.com and experienced financial planner explains that “for decades, these provisions were difficult to calculate for both recipients and the Social Security Administration itself. They were also poorly communicated to individuals, leading to widespread confusion and undermining their ability to effectively plan for retirement.”

How this Affects You?

If you or your spouse worked in public service and receive a government pension, you might see a substantial increase in your Social Security benefits. CNBC’s personal finance reporter Lorie Konish, who has extensively covered retirement planning and financial advisory issues, notes that “affected beneficiaries may see monthly benefit increases ranging from $360 to $1,190.” Additionally, eligible recipients will receive retroactive payments for benefits they would have received throughout 2024.

For those planning retirement, this change creates new opportunities but also raises important considerations:

• If you previously never filed for spousal benefits because the GPO would have eliminated them, you may now be eligible to receive these benefits.
• Those receiving reduced benefits will automatically increase automatically once the Social Security Administration implements the changes.
• Individuals planning to work longer just to reduce WEP/GPO impacts may want to reassess their retirement timeline.

Looking Ahead: The Bigger Picture

While this change brings welcome relief to many public sector workers, it’s important to understand its broader implications. Romina Boccia, Director of Budget and Entitlement Policy at the Cato Institute and an expert on federal spending and Social Security reform, raises important concerns about the long-term impact. She points out that the legislation adds approximately $196 billion in costs over the next ten years to Social Security’s already strained finances. The program’s trust funds are projected to be depleted by 2035, at which point only 83% of scheduled benefits would be payable without additional reforms.

This situation underscores the importance of having a diversified retirement strategy that doesn’t solely rely on Social Security. At Columbus Street Financial Planning, we believe in creating comprehensive retirement plans that can adapt to changing legislation and economic conditions.

What Should You Do Now?

Review your benefits

If you or your spouse worked in public service, review your Social Security statements and pension benefits to understand how these changes might affect you.

Consider filing for benefits 

If you were previously affected by the GPO and never filed for spousal benefits, now might be the time to do so.

Update your retirement planning 

These changes could significantly impact your retirement income. Schedule a review with your financial advisor to assess how these changes affect your overall retirement strategy.

Key Planning Considerations

As you adapt your retirement strategy to these changes, here are some important factors to consider:

Retroactive Benefits

• If you’re eligible for increased benefits, you may receive back payments to January 2024.
• Consider how to best utilize this potential lump sum payment within your financial plan
• Think about tax implications and whether to spread the income across tax years if possible.

Spousal Benefits Strategy

• Review whether you might now qualify for spousal benefits if previously excluded.
• Compare your own benefit to potential spousal benefits to maximize your monthly income.
• Consider how this might affect your decision about when to claim Social Security. 

Retirement Timeline Reassessment

• Evaluate whether increased benefits affect your planned retirement date.
• Review your overall retirement income strategy and required savings rate.
• Consider how these changes might affect your pension-claiming strategy.

How Columbus Street Financial Planning Can Help

At Columbus Street Financial Planning, we understand that navigating Social Security benefits and retirement planning can be complex. As your fee-only financial planner and wealth advisor, we’re here to help you understand how these changes affect your specific situation and adjust your retirement strategy accordingly.

Contact us to schedule a review of your retirement plan in light of these important changes. We can help ensure your retirement strategy remains aligned with your goals while accounting for the evolving Social Security landscape.

Remember: While these changes provide immediate benefits for many public sector workers, they also highlight the importance of having a well-rounded retirement strategy that can adapt to future changes in Social Security and other retirement programs.