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Social Security Fairness Act Recalibrates Plans
Some married , divorced and widowed individuals with pensions may see the biggest boost .
By Eric L . Reiner
THE TEAM AT CAPITAL WEALTH MANagement acted quickly when the Social Security Fairness Act was signed into law on January 5 by former President Joe Biden . The Glastonbury , Conn ., advisory firm wanted clients to know that the legislation repealed the Windfall Elimination Provision and Government Pension Offset . These Reagan-era rules reduced Social Security benefits for many individuals who have a so-called non-covered pension — that is , a state , local or foreign government pension from work on which Social Security tax was not paid . In many cases the reduction in Social Security benefits was dramatic .
“ We sent out a general email to all clients whether they were impacted or not ,” says Jordan Hickey , a partner at the firm . Affected clients certainly needed the update . “ We also viewed it as an opportunity to help out those we might not be in front of yet . Even if a client isn ’ t affected , they may have family members that are . It ’ s a great touchpoint .”
The repeals apply to benefits payable for January 2024 and later . The Social Security Administration has said it could be a year or more before all retroactive benefits are disbursed and monthly benefits are adjusted . A helpful page at SSA . gov that ’ s dedicated to the new law addresses common questions .
The Social Security Administration says that 3.2 million people were hit by either the Windfall Elimination Provision or the Government Pension Offset ( or both ). Untold numbers of future retirees would have been as well , so the change brings relief from some brutal math .
Consider the Windfall Elimination Provision . It slammed people who had earned a non-covered pension from one employer and paid Social Security tax on work for another . Without help from the new law , these pensioners would have had their 2025 monthly Social Security benefit lowered by as much as $ 613 .
The Government Pension Offset was more draconian . It cut spousal and survivor Social Security benefits by two-thirds of the non-covered pension , often to zero . Many married , divorced and widowed people with non-covered pensions were hit by both the Windfall Elimination Provision and Government Pension Offset ( though the latter did not apply to individuals with a foreign pension ).
Stories From The Trenches
The new legislation “ completely secures ” the retirement of one of Aaron Minor ’ s clients , a divorcée who is planning to retire soon with a state pension and then take a job for some needed extra income . Minor , owner of AM Retirement Services in Denver , had developed a financial plan for the client based on her benefit of $ 500 per month in Social Security income .
Although she ’ s divorced , she is eligible for a spousal Social
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