New legislation means more than 3.2 million Americans will get a larger Social Security check — what this means for your retirement plans

Most people have jobs that pay Social Security tax, but not everyone. Some public workers and civil servants work at jobs where they earn a pension but don’t pay any Social Security tax on their wages.

Previously, there were laws in place called the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) that prevented these workers from collecting Social Security payments even if they also worked jobs that were covered by Social Security. However, those laws were repealed by the Social Security Fairness Act.

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“The law that existed denied millions of Americans access to the full Social Security benefits they earned by thousands of dollars a year,” President Joe Biden said in a statement about the legislation. “That denial of benefits also applied to surviving spouses of public-service employees. Benefits cut that cost them security and a little bit of dignity as well.”

With the repeal of those laws, an estimated 3.2 million workers, including but not limited to, police, teachers and firefighters, stand to potentially collect thousands more in Social Security benefits. Here’s what this could mean for these workers, along with some tips on how to adjust retirement strategies based on the change.

How will the Social Security Fairness Act affect you?

If you or your spouse worked at a job that was not covered by Social Security and that entitled you to a pension, but also worked at a job that entitled you to retirement benefits, then you may have had your Social Security payments reduced by the WEP or GPO — or may not have even received any Social Security benefits at all.

If that was your situation, this Act will change things for you. You may now be entitled to collect the full Social Security you earned over your career.

Those who are owed a one-time retroactive benefit increase dated back to January 2024 (when the GPO and WEP no longer applied) can expect to receive it by the end of March. Certain beneficiaries with new monthly benefit amounts will begin receiving higher Social Security payments starting in April.

The Congressional Research Service estimates that your payments will go up by an average of $360 per month, although the Social Security Administration said some people could see over $1,000 in extra monthly retirement income. Retroactive payments will also be worth an average of $6,710.

“Look, by signing this bill we’re extending Social Security benefits for millions of teachers, nurses, and other public employees and their spouses and survivors. That means an estimated average of $360 per month increase. That’s a big deal in middle-class households like the one I grew up in and many of you did and … for millions of Americans going forward,” President Biden said at the signing of the Act.

Read more: I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 5 of the easiest ways you can catch up (and fast)

What do new payments mean for retirees?

Most people won’t need to do anything to get either their retroactive payments or their increased checks, and they’ll receive mailed notices from the Social Security Administration alerting them to the extra money they’ll collect.

However, those who never applied for their own retirement, spousal or survivor benefits because of the WEP or GPO will need to apply online or via phone at 1-800-772-1213. And make sure your direct deposit information and mailing address are up to date.

Retirement planning may get a lot easier

Social Security, your savings and your pension should all work together to support you. With more money coming in from Social Security, you may be able to reduce your withdrawals from your retirement accounts so you stand a better chance of making your money last. Just be sure you continue to take your required minimum distributions to avoid penalties.

You can also use this extra money to help you cope with inflation and rising prices, as far too many retirees are struggling in light of post-pandemic price increases. You’ll want to understand your net worth and create a budget to spend it wisely, though, so you can make the most of the extra benefits that you earned and that the government is now finally going to recognize.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.