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Starting in April, some retired teachers, firefighters, police officers and other public-sector employees will see some extra scratch in their monthly Social Security check, courtesy of the Social Security Fairness Act (SSFA) signed into law by former President Joe Biden.
The SSFA eliminated some longstanding provisions that reduced benefits for 3.2 million retirees (and their spouses or surviving spouses) who receive government pensions that are not subject to Social Security taxes.
As of March 7, the Social Security Administration (SSA) has processed 71 percent (or 2.1 million) of the monthly beneficiary adjustments due to be made.
(FYI: President Donald Trump also has big plans for Social Security that could impact future payments. You may want to consider speaking with a financial advisor as you sort through the evolving landscape of Social Security.)
Who qualifies for increased payments?
The main beneficiaries of the SSFA are people who have received or are expected to receive pension benefits from work that was not subject to Social Security payroll taxes (i.e., a non-covered pension). The following types of worker tend to fall into this category:
- Teachers, school staff, firefighters and police officers in non-covered states
- Federal employees covered by the Civil Service Retirement System
- Workers who were covered by foreign government pensions
Up until now, Social Security benefits for these workers were subject to two now-repealed provisions affecting how the government calculated benefits: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). WEP and GPO were implemented decades ago to reduce or eliminate government benefits for workers who were exempted from paying FICA — the primary source of funding for both Medicare and Social Security — because they were covered by a workplace pension.
According to the Social Security Administration, roughly 28 percent of state and local public employees are eligible for a benefit increase due to the new law, which leaves 72 percent who won’t see an adjustment in their monthly Social Security checks.
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How much will you get and when?
The Social Security Administration has already started settling up with those owed retroactive payments. As of March 4, it had paid out more than $7.5 billion in clawbacks due to nearly 1.3 million people. The average payment so far is $6,710.
Adjustments to monthly benefit checks going forward for those already collecting Social Security will be reflected in March payments (which are sent out in April). However, the administration warns that it could take up to one year to process and implement updates and retroactive payments for beneficiaries with complex cases.
According to calculations by the Congressional Budget Office, the average monthly benefit bump for public sector retirees will be $360. However, some recipients may see their check increase by $1,000 or more. (For reference, here’s the average Social Security check amount.) The exact adjustment is based on income history and the amount previously withheld from your earnings.
Bottom line
Most Social Security recipients who qualify for a monthly benefit boost will receive the adjustment automatically as long as the SSA has your current mailing address or direct deposit information on file.
Verify your details at ssa.gov/myaccount/ (or call 1-800-772-1213) and bookmark the Social Security Fairness Act page for the latest updates and instructions.
If you haven’t yet started claiming Social Security, any adjustments due to the Social Security Fairness Act will be applied to your future payouts. In the meantime, there are other moves you can make both before and during retirement to boost your monthly benefits, such as having an experienced financial advisor guide you through the maze of evolving laws and array of Social Security claiming strategies.
