Barbservations About Social Security Fairness

After decades of failed attempts, H.R. 82, the Social Security Fairness Act (SSFA) passed both the House and Senate with bipartisan support and was signed into law by President Biden. The law will repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) that reduced public sector workers' earned Social Security benefits. 

For some Americans with lower incomes, passage of this bill will be life-changing. They lost (or would have lost) much of their own earned SS benefit and/or Social Security benefits as a spouse or widow(er) simply because they worked in a public sector job.

For me, the law is simply about fairness, not financial survival. Yes, it is personal. Full Disclosure: I am one of the about 2.8 million people affected by the Social Security Fairness Act. For the 32 years that I have been operating Money Talk and have been self-employed, I have paid (and still pay) 15.3% of net business earnings in FICA tax as both an employee and an employer. I also earned Social Security credits (i.e., quarters of coverage) from work during my teens and early 20s. 

After I ended my Rutgers Cooperative Extension career in January 2020 and started claiming a federal pension, my earned SS benefit took a big haircut due to the Windfall Elimination Provision (WEP). I wrote more about how I was “WEPed” in a 2023 blog post for 403bwise.

Some people have referred to folks like me who earned both Social Security and pension benefits in a derogatory way. They call us "double dippers." That is not true at all. Instead, we took the initiative (or found it financially necessary) to become "dual earners" (e.g., with side hustles or second jobs) or had a mix of public and private sector jobs throughout our careers. Either way, we met the qualifications for both types of benefits.

I recently listened to a Next Gen Personal Finance webinar about teachers with side hustles. One worked for Disney and another at a local stadium near his hometown. In the future, teachers in some states (note: 33 states opt-in to Social Security, 13 states (including DC) opt out, and 5 states allow school districts to opt-in or opt-out) and others with jobs not covered by Social Security will get full Social Security credit for their "outside" work. Like me, they will no longer have benefits earned from entrepreneurship or private sector jobs cut because they also had public sector employment. 

This is huge and will affect many teachers/school staff and those with long public sector careers (e.g., police officers and firefighters) or other types of jobs not covered by Social Security who still managed to earn the 40 quarters of coverage required to be eligible for benefits like I did. That is the reason for this post....to spread the word. Be sure to check this out if you or your family are affected by this law. 

Finally, it is important to note that the Social Security Fairness Act will put more stress on an already precarious government program as its opponents rightly pointed out. The 2024 Social Security Trustees report projected depletion of the trust fund by 2035, necessitating an accompanying 17% benefit cut. Congress will need to decide on potential remedies to shore up Social Security (e.g., raising the wage cap, FICA tax, tax on Social Security, and/or full retirement age) in the years ahead. 

Keep paying attention to Social Security-related legislation. This post that I wrote for 403bwise provides additional information. It is certainly possible that the WEP and GPO could be tweaked and restored in some way. People are already talking about more means-tested WEP and GPO 2.0 formulas with better data analysis capabilities than what the government had in 1983, when the now newly repealed WEP and GPO first went into effect. 

One final thought: it is generally wise to accumulate retirement savings in an IRA, employer tax-deferred retirement savings plan, and/or taxable (brokerage) account. Do not rely on a pension and/or Social Security alone.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.