Social Security Fairness Act: Quiet Rule, Loud Impact

                Nearly all of us know an educator who has dedicated their life to shaping the future - often with little recognition or reward. For decades, many of these public servants have faced an unfair financial penalty under Social Security rules. On top of that, educators enrolled in TRS and similar retirement programs have been penalized for decades by the Social Security “Windfall Elimination Provision” (WEP) and/or the “Government Pension Offset” (GPO). That changed earlier this year. Thanks to the newly signed “Social Security Fairness Act” (SSFA), these penalties have finally been repealed - creating new opportunities for retirement planning and long–overdue benefit restoration! The remainder of this post will discuss the canceled provisions, the new act, and planning implications.

Old Rules

                Most Texas educators only enrolled in Teacher Retirement System of Texas (TRS) do not pay into Social Security.  So, it is understandable that they are not entitled to Social Security benefits on their own work history.  However, the GPO reduced TRS members’ Social Security spousal or widow(er) benefits by two-thirds of their TRS benefit.  For example, a TRS member’s $1,000 monthly TRS benefit would reduce their Social Security spousal benefit by $667 per month.  In this example, the entire spousal benefit would be fully offset if it is $667 per month or less.

                The WEP also reduced a different kind of Social Security benefit in a different way.  The WEP applied to worker benefits and potentially reduced Social Security benefits based on the “non-covered pension” benefits.  To understand the WEP reduction compared to the GPO reduction, we must first understand the way Social Security worker benefits are calculated.

Worker benefits are calculated based on your average lifetime monthly earnings, known as AIME. Then, Social Security applies a tiered formula to determine your Primary Insurance Amount (PIA) – your monthly benefit amount.

The breakdown looks like this:

*This formula is used for workers without a “non-covered pension” – meaning those who paid into Social Security throughout their careers.

For workers with a non-covered pension (such as Texas educators enrolled in TRS), the Windfall Elimination Provision (WEP) reduced the first percentage from 90%, depending on their Years of Coverage (YOCs):

 *So instead of receiving 90% of their first $1,174/month in earnings toward their benefit, many educators saw that number slashed significantly based on their career coverage.

SSFA

                The SSFA repealed the WEP and GPO provisions which enables people with “non-covered pensions” to receive Social Security benefits.  Additionally, the new act will automatically increase the monthly benefit of the 2.8 million recipients impacted by the WEP and GPO.  Many of these impacted recipients will receive a lump sum payment of reduced benefits going back to January 2024.  Wondering how this might affect your taxes? Here is a helpful article discussing Social Security “back payments.”  On a related note, while the “One Big Beautiful Bill Act” has made headlines, it does not make Social Security benefits tax-exempt – this overview explains why.

                According to the SSA, 734,601 beneficiaries had their spousal or widow benefits reduced by the GPO in 2022.  This equates to about 12.6 percent of the 5.84 million people receiving these benefits.  Almost 70 percent of these beneficiaries had an average “non-covered pension” monthly benefit of $3,502 that fully offset the average Social Security worker benefit of $1,825 monthly in 2022.  The remaining 30 percent had a portion of their benefits offset.

Strategies

               According to the SSA, they have received 273,023 new applications since the SSFA was passed through the end of the week of July 4, 2025.  In other words, it stands to reason that there are more people potentially impacted by the now repealed WEP and GPO than cited in the previous paragraph.  Anecdotally, our experience in hearing potential beneficiaries forego applying for benefits because they knew their benefits would be offset supports this conclusion.  Therefore, the strategy in this case would be to apply for Social Security benefits if you have decided not to due to WEP and/or GPO.  You should still consider your personal timing and financial situation to determine if you should submit an application, but if you have delayed filing purely because of the potential offset, you should consider applying immediately.

Eligibility might also be holding you back. You don’t need “40 quarters” to qualify for spousal benefits – this guide explains how. For example, you might be eligible for full (not reduced by GPO) spousal benefits if your spouse qualified for full Social Security worker benefits even if you never paid into Social Security during your decades of work in school districts.  You could now qualify for benefits you were previously denied - don’t miss what’s yours. If you’re past full retirement age, this article on retroactive filing walks through how the SSFA allows benefits to apply all the way back to January 2024.

Other strategies or considerations to contemplate are how new Social Security benefit amounts impact retirement readiness.  With a new retirement income, could you retire earlier or possibly need to save less?  With a new survivor benefit, do you need less life insurance?  Maybe you were close to earning your 40 quarters during your second career but stopped short because you figured the WEP reduced Social Security worker benefit would not be worth it.  Now, you might think it’s worth it to work those extra quarters, to potentially get a full Social Security benefit.

Conclusion

                The SSFA is a welcomed provision to say the least.  It would be wise to reconsider your Social Security claiming strategy now that you may be eligible for a new benefit.  Maybe you were waiting until 70 to get the maximum Social Security benefit available, but now, you might want to file at full retirement age so your spouse can get a spousal benefit that would have otherwise been unavailable due to the GPO.  If you’re not at retirement age, you might also want to reconsider how this impacts your strategies now that you may have an unexpected retirement income source.