Understanding the Social Security Fairness Act of 2025
Potential Changes for Retirees, Federal Employees, and Social Security Recipients
On January 5, 2025, the Social Security Fairness Act was signed into law, eliminating two long-standing provisions—the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These changes primarily benefit retirees who receive pensions from employment not covered by Social Security, including many federal, state, and local government employees.
Social Security Basics
To understand the recent changes, let’s start with how Social Security benefits are determined:
✔️ Eligibility
To qualify for Social Security retirement benefits, you must have at least 40 quarters (10 years) of covered employment—i.e., jobs where you paid into the Social Security system.
🧮 How Benefits Are Calculated
Your monthly retirement benefit is based on your highest 35 years of covered earnings, indexed for inflation. These earnings are used to determine your Average Indexed Monthly Earnings (AIME). Your benefit is then calculated using a progressive formula known as the Primary Insurance Amount (PIA):
Benefit Calculation Formula:
Monthly Earnings Average (AIME) Range | Percentage of AIME Applied to Benefit |
$0 – $1,174 | 90% |
$1,174 – $7,079 | 32% |
Over $7,079 | 15% |
⏳ Claiming Strategies
You can begin benefits as early as age 62, but with a permanent reduction of approximately 0.5% for each month you claim prior to your Full Retirement Age (FRA)
Wait until your FRA which would be between 66 and 67, depending on birth year, for full benefits.
Delay benefits beyond FRA and benefits increase by up to 8% for each full year you delay until age 70.
Social Security Fairness Act
Next, we can review a summary of the changes and who it impacted:
What Were the WEP and GPO?
These two provisions were originally designed to coordinate Social Security with other public-sector pension systems, but they’ve long been criticized as unfair—especially by federal employees, teachers, and others in public service.
🔹 Windfall Elimination Provision (WEP)
Applied to workers who received a pension from non-Social Security covered employment like the Civil Service Retirement System (CSRS) and qualified for Social Security from other work.
It reduced Social Security benefits by changing the first factor of the benefit formula from 90% to as low as 40% depending on years of Social Security-covered work.
The WEP reduction was capped at 50% of the non-covered pension amount.
🔹 Government Pension Offset (GPO)
Affected spousal or survivor benefits for those with a non-covered pension.
It reduced Social Security spousal/survivor benefits by two-thirds of the non-covered pension, sometimes eliminating the benefit entirely.
Who Benefits?
The repeal primarily helps:
Federal employees under the CSRS, who had also worked private-sector or Social Security-covered jobs.
State and local government employees with similar work histories.
Surviving spouses and dual-income households where one spouse had non-covered employment.
If you are unsure whether you were affected by WEP or GPO—or will be eligible for retroactive benefits—it may be worth reviewing your Social Security statement or contacting SSA.
Timing and What to Expect
Benefits affected by WEP and GPO will increase retroactively to January 2024.
Payments for past months are expected to be disbursed primarily in fiscal year 2025, with some extending into 2026.
Current Beneficiaries don’t need to reapply—adjustments should be made automatically by the Social Security Administration (SSA).
Retirement and Income Planning Updates
And whether you were directly impacted by these changes to eliminate the WEP and GPO reduction to social security benefits, this legislative change is a good reminder:
Review your Social Security benefit record and estimate statement
Reassess retirement income projections and how Social Security incorporates into your overall distribution plan
Consider how different Social Security claiming strategies have the potential to maximize your expected benefits.
Our team is available to help you assess any impact these changes may have for you and more importantly how your Social Security elections impact your overall distribution plan.
Want more details on the impact to you?
We encourage you to check out the resources available on the social security site and periodically review your benefit statement.
- my Social Security account:https://www.ssa.gov/myaccount
- Retirement Estimator: https://www.ssa.gov/benefits/retirement/estimator.html
- WEP Calculator: https://www.ssa.gov/planners/retire/anyPiaWepjs04.html
- GPO Calculator: https://www.ssa.gov/planners/retire/gpo-calc.html
Sources:
Congressional Budget Office (CBO) analysis of H.R. 82
SSA: Social Security Fairness Act: https://www.ssa.gov/benefits/retirement/social-security-fairness-act.html
SSA: Windfall Elimination Provision: https://www.ssa.gov/benefits/retirement/planner/wep.html
SSA: Government Pension Offset: https://www.ssa.gov/benefits/retirement/planner/gpo.html