Key Takeaways:
We would like to pass along some good news for clients who have accumulated or are currently receiving benefits under a public pension system. Recent rule changes to Social Security may allow workers covered by a public pension to potentially receive higher Social Security payments.
The Social Security Fairness Act
On Jan 5, 2025, the Social Security Fairness Act was signed into law. As a simple summary, the Act favorably changes how the Social Security Administration calculates benefits for many public pension participants. These changes are most likely to affect state and local government workers, including public school teachers.
More technically, the Social Security Fairness Act repeals two restrictive provisions that had historically reduced payments for many public pension participants: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These restrictive provisions—both the WEP and the GPO—have now been repealed. These changes have been announced to be retroactively effective as of Jan 1, 2024.
Will This Increase My Social Security Payments?
If you worked in a position that accrued pension benefits without paying Social Security tax (typical of many state and local government workers with public pensions), then these new changes may potentially increase your Social Security payments. For a specific example, Kentucky public school teachers under the KY retirement system are very likely to benefit from the Social Security Fairness Act.
The potential increase in Social Security payments for affected workers should apply to payments based on your own personal work record and should also help boost payments due for spousal benefits and/or survivor benefits under Social Security.
What Should I Do Now?
Have Patience. The first piece of advice we can offer is to have some patience with the Social Security Administration. These recent changes are brand new, and it will likely take a good deal of time to sort out all of the practical implications of the Social Security Fairness Act. In fact, the Social Security Administration estimates that these changes “adjust benefits for over 3 million people”, and “much of the work must be done manually” (quote from SSA webpage link below.)
Login, Review “my Social Security” Account Online. We strongly recommend that everyone either login, re-establish, or initially establish your “my Social Security” account online through ssa.gov. Among other features, the ssa.gov website allows you to view and save official statements, benefit records, and other documents online.
This periodic login and review process will also help ensure that you have the latest security settings for your ssa.gov profile and to make sure that your personal information is correct and up to date. Specifically, the Social Security Administration recommends reviewing and confirming any “current mailing address and direct deposit information” that is on file.
Watch for Official Letters, Notifications. If you or your spouse is covered by a public pension, be on the lookout for any personal notification letters from the Social Security Administration. If you receive personal notification, please send in a copy of the letter and contact your team at Saling Wealth Advisors so we can help review in the context of your financial picture.
Watch for General Announcements. You can also check on official updates and announcements connected to The Social Security Fairness Act at the link below:
This webpage includes a very helpful FAQ section that helps to address many basic questions concerning the recent changes.
Remain Vigilant Against Scams. Scammers will undoubtedly be using these recent changes as an opportunity to steal personal information and offer fraudulent assistance. As always, please remain vigilant watching out for the warning signs of these scams. The Social Security Administration is very clear with their advice. If you receive unsolicited communication about these changes, the Social Security Administration “will never ask or require a person to pay either for assistance or to have their benefits started, increased, or paid retroactively. Hang up and do not click or respond to anyone offering to increase or expedite benefits” (quote from SSA webpage link).
How Saling Wealth Advisors Can Help
Your team at Saling Wealth Advisors is continuing to monitor official announcements regarding the Social Security Fairness Act. We know that some of you could benefit significantly from higher Social Security payments as a result of these changes.
If you receive any personal notification letters from the Social Security Administration, please contact us and send in a copy of the notification. Together we will review how these changes may affect your current and future cash flow planning and help determine any action items that may result.
As always, you should consult with your tax and legal advisors for any tax or legal issues affecting your specific situation. Saling Wealth Advisors cannot provide tax or legal advice.
This material is not financial advice or an offer to sell any product and is not a recommendation to buy or sell any particular security. The opinions expressed are those of the Saling Wealth Advisors’ Management Investment Team and are subject to change without notice.
Saling Wealth Advisors (“SWA”) is an independent SEC registered investment advisor. Registration does not imply a certain level of skill or training. This material is provided for informational and educational purposes only. More information about SWA including our advisory services, fees, and objectives can be found in our Form ADV Part 2A, which is available upon request.
