In 2025, Social Security recipients saw a modest boost in their monthly benefits, which increased from $1,927 to $1,976. Despite this $49 raise, it fell short of expectations for many, especially for retirees struggling with limited savings, as inflation continues to pose challenges.
However, there’s a glimmer of hope for roughly 2.8 million Americans on Social Security, thanks to a new bill awaiting President Biden’s signature. Here’s what you should know about this latest development.
The Senate has recently passed the bipartisan Social Security Fairness Act as of December 21, 2024. Having already cleared the House, the bill is now on its way to the President, who is expected to approve it before finishing his term.
This piece of legislation aims to abolish two controversial Social Security rules: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). Both provisions have historically reduced benefits for retirees receiving government pensions from roles where they didn’t contribute to Social Security, notably affecting spousal and survivors benefits as well.
If enacted, the bill would retroactively eliminate these provisions for all benefits distributed after December 2023. Consequently, over 2 million retired workers and more than 734,000 spouses would see an increase in their Social Security checks moving forward, along with receiving back payments for the benefits once the law is in effect. Nonetheless, there is still uncertainty around when these individuals will actually receive this owed money.
This legislative change is anticipated to significantly aid families of former public servants including police officers, firefighters, and teachers. Nevertheless, while it garnered support from 76 senators, the bill does not lack critics.
Considering the downside, the short-term outcome of the Social Security Fairness Act is highly favorable for the affected 2.8 million beneficiaries. Others may notice no immediate change in their benefits, but the broader implications remain worrying.
The issue emerges down the line, as Social Security’s trust funds face the threat of depletion. The Congressional Budget Office previously projected that these funds would run out by around 2034. Without comprehensive reform, benefits could be slashed by 23% in 2035.
The enactment of the Social Security Fairness Act would drive Social Security expenditures by an estimated $196 billion, potentially accelerating the trust fund depletion date by about six months.
While this may seem like a minor shift, it’s quite impactful. The looming challenge of Social Security’s funding has been on the radar for some time, yet proposed solutions have struggled to gain momentum partly because none are appealing. Eventually, the government will need to either raise taxes or reduce benefits to shore up funding, or perhaps both.
If this issue resonates with you, consider reaching out to your congressional representatives to express your concerns. It would also be wise to keep an eye on this situation as it develops into the new year, since the discourse around Social Security’s financial health is likely to intensify as we approach the 2034 deadline.
