For most retirees, Social Security benefits are calculated using a single formula, which takes into account an individual’s earnings record and is meant to more greatly benefit those who earn less. Historically, a subset of workers who spent at least part of their working lives in positions in some state and local governments have had their Social Security benefits reduced, sometimes down to $0. This reduction stems from two provisions known as the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), which were implemented with the objective of fairness across Social Security beneficiaries.
In reality, the WEP (reductions to an earner’s own benefits) and the GPO (reductions to eligible spousal benefits) was poorly communicated to individuals, difficult for individuals to calculate with much accuracy, and ultimately proved unpopular.
In response, Congress passed the Social Security Fairness Act, repealing the WEP and GPO, retroactively to 2024. This means individuals whose Social Security benefits were reduced by either provision can expect to have their full benefits restored, as well as any back payments due from last year.
So when might individuals see the impact of these repeals, and will retroactive payments be received in a lump sum or increased monthly benefit amounts? It remains to be seen. For those of you who may be impacted, if you were already collecting payments from Social Security, there is no action to take at this time. If you have been delaying receipt of benefits due to the WEP or GPO, you might consider applying for benefits as soon as possible if it makes sense in light of your full financial picture.