For Your Benefit: How will the WEP & GPO Repeal Affect My Social Security Benefit?
Many retirees—approximately 2.8 million, potentially including you—are eagerly awaiting the benefits of the recently signed Social Security Fairness Act, enacted on January 5, 2025. This landmark legislation primarily repeals two provisions:
The Windfall Elimination Provision (WEP)
The Government Pension Offset (GPO)
Both of these provisions had a significant impact on the Social Security benefits of state and municipal government employees, such as teachers, police officers, firefighters, railroad retirement system participants, most permanent federal employees hired before 1984, and self-employed individuals with low net earnings. The new law repeal is set to restore full benefits to those affected by these laws, retroactive to January 2024.
—While this is an exciting turn for many retirees, it is important to note that the Social Security Administration (SSA) has stated that it may take a year or more to fully restore the benefits due to the complexity of recalculating payments for millions of affected individuals.—
For many who are affected by this new legislation but don’t have time to research the matter themselves, the main questions are likely:
“What does this all mean?” and
“How much will this affect my monthly benefit?”
In this article, I’ll explain what the WEP and GPO were, highlight key components of the new legislation, and discuss how the repeal can positively impact your Social Security benefits—whether you're collecting your own benefit, a spousal benefit, or a survivor's benefit. Additionally, we'll cover how to estimate the anticipated impact on your Social Security benefit. Since these calculations can be complex and tedious, I'll provide examples and resources to simplify the process as much as possible.
How Did The Windfall Elimination Provision Affect Me?
For decades, this law has been in effect, initially signed by President Reagan on April 21st, 1983. The initial idea behind this law, whether right or wrong, was to prevent the disproportionate collection of retirement benefits by state or municipal employees who became eligible to collect both a non-covered pension and Social Security benefits.
Prime example: Think of a public school teacher, police officer, firefighter, or some variation of a state/municipal employee who worked 20 years at their job and became eligible to collect from a non-covered pension (a plan in which Social Security taxes were not withheld). Then, they went on to work 10 years in a second career where they paid Social Security taxes for the required minimum 40 quarters, making them eligible to collect Social Security.
People in this situation faced a significant reduction in their monthly Social Security benefit through the WEP reduction. To properly explain how this affected the benefit received, I need to provide a brief overview of AIME and Social Security bend points.
The AIME (Average Indexed Monthly Earnings) is used to calculate your PIA (Primary Insurance Amount), which in turn is used to determine your monthly Social Security benefit. The AIME is calculated by taking the sum of the highest 35 years of earnings in your employment history and dividing that number by 420 (the number of months in 35 years).
Once we have the AIME, we must reference the Social Security "Benefit Formula Bend Points" chart. This chart is used to determine the first and second bend points for calculating your PIA, specifically in the year you turn 62. This may seem complicated, but once you understand the process, it really is quite simple.
For example: Let’s assume Samantha spent 20 years working as a police officer, paying into a non-covered pension, and then started a second career where she spent 10 years (40 quarters) paying into Social Security. Samantha would now be eligible to collect her non-covered pension benefit, as well as Social Security.
Let’s assume her AIME was calculated to be $7,500. To determine her PIA (Primary Insurance Amount), we will reference the Benefit Formula Bend Points chart to see what the two bend points are for the year she turns 62 — let’s assume that was in the year 2022.
Calculating Your Survivor’s Benefit
When determining your PIA through standard Social Security calculations, your AIME is accounted for in three parts.
Every dollar earned up until the first bend point is accounted for at 90%
(In this case, up to $1,024).Every dollar earned between the first and second bend points is accounted for at 32%
(In this instance, every dollar between $1,024 and $6,172).Every dollar earned beyond the second bend point is accounted for at 15%
(In this case, every dollar beyond $6,172).
So, for a typical individual who worked at covered employment only and generated an AIME of $7,500, the PIA would calculate to:
90% of $1,024 ($921.60)
32% of $5,148 ($1,647.36)
15% of $1,328 ($199.20)
For a combined total of $2,768.16, making up their entire PIA. Now, this is not the exact amount you will receive for your Social Security benefit, as other factors come into play, such as whether you elect to begin collecting your benefits immediately at 62, which will result in a reduction from your PIA amount. If you wait until your FRA (Full Retirement Age), this would be the expected benefit received. Or if you elect to wait to collect beyond your full retirement age, this will result in deferred retirement credits increasing your total benefit. But this is a side note from the point I’d like to discuss today, which we can go into more detail on in a later blog.
Now, back to our example of Samantha: Because Samantha would be collecting a benefit from her non-covered pension as well as Social Security, the previous legislation was in place to ensure that a disproportionate amount of retirement benefits wasn’t being collected. Again, whether this was right or wrong, let’s look at how her Social Security benefit would be affected by the WEP reduction.
Assuming Samantha has an AIME of $7,500, we will input her earned income just as we did in the previous example. The key difference is on the earned income up until the first bend point. Where previously I showed you it was accounted for at 90%, it will instead be accounted for at only 40%. Let’s look at the math:
40% of $1,024 ($409.60)
32% of $5,148 ($1,647.36)
15% of $1,328 ($199.20)
For a combined total of $2,256.16, making up her PIA. A total reduction of $512.00 to Samantha’s monthly Social Security benefit. Again, this amount would be subject to change depending on the factors we discussed above. However, this is a considerable amount of income lost for Samantha in retirement.
A caveat to this reduction: The total reduction amount, in this case, $512.60, cannot exceed 50% of the pension benefit Samantha is receiving. So, if Samantha was receiving, let’s say, $800 monthly from her pension, the maximum her Social Security benefit could be reduced would be $400.
Per the Social Security Fairness Act, signed into law this past January, this reduction will no longer be in effect, and benefits will be fully restored retroactive to January of 2024. Now, the SSA is currently doing their due diligence to determine when they will fully restore the benefits of those affected. Though it is unclear as to when this lump-sum payment of missed benefits will be satisfied, the SSA has signaled that it may take a year or more to recalculate and process payments to the millions affected. However, they anticipate you will be made whole in the relatively near future.
Just The Tip Of The Iceberg
I’d say this is a very good start and a good amount of relief for the currently affected retirees. But now we must discuss the second, and potentially much more impactful, repeal cited in the new act. This would be the repeal of the Government Pension Offset (GPO). This law affected the treatment of spousal and survivor benefits under Social Security for individuals who were receiving pensions from government jobs not covered by Social Security. Again, this topic may be quite complex, but I will do my best to simplify exactly what was happening in these instances and share with you how the repeal of this law could significantly affect the retirement benefits you’re entitled to collect. This affects every individual differently, given their personal situations, which makes it very apparent the importance of interviewing and finding a financial advisor you can trust to assess your exact situation and paint a clear picture of how this all is or will affect your retirement income.
As a sidebar, and in light of that thought, my name is Ryan Morrissey, CFP®, CLU®, CHFC®, CMFC®. I am the owner and principal wealth advisor of Morrissey Wealth Management. I’ve spent over 24 years in the financial industry guiding my clients to and through a successful retirement. The aim at my firm is to provide you with invaluable investment advice specific to your situation and needs, parlayed with comprehensive tax, Social Security, and Medicare planning. Put simply, we want to prepare you for a successful retirement, and once we get you there, provide the guidance you will need to ensure it lasts!
It’s important to note, we are a fee-only advisory firm, meaning myself and all our services are available to you with no added costs beyond the fee we will discuss. If you would like to see if my services would be a good fit for you, I urge you to click the image below to view my availability and set up a free consultation at your leisure. I greatly look forward to speaking with you!
Now Back To The GPO Repeal
This is where we will see the greatest impact for retirees. The Government Pension Offset (GPO) was first signed into law by President Jimmy Carter in 1977. This law, whether right or wrong, was created to prevent the “double dipping” of spousal and survivor benefits from Social Security for individuals who worked in a government/public position not covered by Social Security and collected a pension. To simplify how the math worked out and explain how it will substantially affect the retirement benefits for the millions impacted, I will provide some examples of different scenarios to paint a clearer picture. However, the main element of the rule was that any individual aiming to collect a spousal or survivor benefit could only collect the portion of their calculated benefit that exceeded 2/3 of their government pension. This had a substantial impact on the benefit many spouses and survivors were able to collect, and in many cases, it eliminated their benefit entirely. Before we can go into some examples of how this will play out, we must first understand the difference between how a survivor's benefit and spousal benefit are calculated. This part can get rather complex, but I will aim to simplify and provide a brief overview of these calculations. Again, I urge you to click the button above to set up a free consultation with me so we can dive further into how this affects you specifically in your retirement!
Calculating Your Spousal Benefit
I’ve created a few graphics for the next few parts we will discuss to depict the over arching idea of how the benefits are calculated.
As we previously discussed this is the line of calculations used to determine the social security benefit for an individual who has paid into social security for at least 10 years(40 quarters)
While there are many factors that come in to play to determine what your actual spousal benefit will be— This amount collected or eligible to be collected will be used to determine the amount of benefit owed for an individual’s spousal benefit.
A spousal benefit, is calculated as 50% of the PIA calculated for the spouse that did work at a social security covered job. Which can then be reduced if the spouse files for spousal benefits prior of their own FRA (unless they have a child in their care under the age of 16 or disabled).
Calculating Your Survivor’s Benefit
In the case of widows and widowers of deceased earners, it gets even stickier. A major consideration that will affect the monthly benefit received is whether the deceased earner, the surviving spouse, or both spouses filed for their benefits before or after their FRA (Full Retirement Age).
The simplest scenario would be if the deceased spouse had filed for their Social Security benefit after reaching their Full Retirement Age, and the surviving spouse filed for their survivor benefit after reaching their Full Retirement Age as well. In this case, their benefit amount would be 100% of the earning spouse's PIA, plus any delayed retirement credits they became eligible for.
If the deceased spouse had filed for retirement benefits before reaching FRA and was receiving a reduced benefit at the time of death, the survivor benefit will also be reduced. In this case, if the surviving spouse applies for survivor benefits after reaching their own FRA, the maximum reduction is 17.5%, meaning the minimum survivor benefit will be 82.5% of the deceased spouse’s PIA.
In the reverse situation, where the deceased spouse filed for retirement benefits after FRA, but the surviving spouse files for benefits before reaching FRA, the survivor benefit will be reduced by up to 28.5% of the deceased spouse’s PIA. This occurs if the surviving spouse files for survivor benefits at age 60, the earliest age they can apply.
Here is a simplified chart view of how the different scenarios will affect your survivors benefit.
How The Government Pension Offset Came Into Play
Now that we understand how spousal and survivor benefits are calculated, let’s revisit the overarching topic of the Government Pension Offset (GPO). As we mentioned earlier, the GPO significantly reduced, if not eliminated, the Social Security survivor and spousal benefits many retirees were eligible for. Let’s dive into a couple of examples to see how this played out for many people.
Let’s say Sally worked as a public school teacher for 25 years and today is collecting a pension benefit of $2,760 per month. Sally’s husband worked over 10 years (40 quarters) at a covered job, paying into Social Security. After all the calculations were completed, Sally’s total spousal benefit should be $1,725.
However, because Sally has a pension of $2,760, the total spousal benefit she can receive is limited to the amount that exceeds 2/3 of her pension amount ($1,840). In this case, Sally would not be eligible to collect any of the Social Security spousal benefit she would have otherwise been entitled to.
Now let’s look at an example of a survivor’s benefit, which can more significantly impact the financial security of a surviving spouse who can no longer rely on the Social Security benefit their spouse was collecting, nor the spousal benefit they were entitled to due to the 2/3 rule set by the GPO.
Let’s say John worked 35 years in covered employment, paying into Social Security, and his total monthly Social Security benefit was $2,875. John’s wife, Maria, worked as a public school teacher and collects a non-covered pension of $3,450. For this example, let’s assume John passed away. Under normal conditions, Maria would be eligible for the full $3,450 (adjusted for the time of retirement, as discussed above). For simplicity, let’s assume both spouses retired exactly at their FRA, so her survivor benefit would have been $2,875.
Due to the GPO, Maria would not be able to collect her full $2,875 survivor benefit from Social Security. She would only be able to collect any benefit exceeding 2/3 of her pension amount. So, 2/3 of her $3,450 pension = $2,300.
$2,875 (SS benefit) - $2,300 (2/3 pension) = $575 monthly benefit.
GPO Must Go
With the repeal of the GPO, Maria, from our previous example, would now be eligible to collect her full survivor benefit, totaling an additional $1,425 per month! When we put the numbers on paper, it’s clear to see how significant this legislative change is for some families. For some households, the repeal will only result in a few hundred dollars more each month, but for many others, it could make the difference of thousands in monthly retirement income.
Estimating The Impact This Will Have On My Benefits
For those who have yet to file for Social Security benefits, it will be fairly straightforward to estimate their monthly benefit. The Social Security Administration sends out annual statements to individuals who have not yet filed for their benefits. These statements provide the estimated monthly benefit amount if they were to retire at 62 (the earliest age of eligibility) up to age 70 (the latest age for delayed retirement credits). These amounts are not adjusted for WEP reductions, so they’d simply get what is listed on the statement.
Where it gets more complicated is for individuals who are already collecting benefits. Since they have already started collecting, the SSA no longer sends out annual statements or future benefit estimates. On one hand, this makes sense, as the benefit amount doesn’t typically change, and there is no real need for future estimates once collection has begun.
In this case, we’ll need to do a little homework. We must use available resources to estimate the value based on what information we have. Thankfully, anyone can access their “My Social Security” account, whether they’ve filed for benefits or not, and review their annual earnings history. With this information, we will need to:
Calculate their AIME.
Calculate their PIA using the associated bend points corresponding to the year they turned 62.
Apply any increase or decrease for early or delayed filing.
Calculate the total spousal or survivor benefit (if applicable).
The detailed Online Benefit Calculator can be a helpful tool for this initial benefit estimate.
The more complicated portion comes when the earner—whether filing for benefits or as a spouse or survivor—began collecting years or even decades ago. In this case, we need to factor in the annual COLAs (Cost-of-Living Adjustments) that would have been applied since the initial collection. This will inflate the original benefit to today’s dollars by using the SSA’s COLA rates. We then manually inflate the benefit to bring it up to the value it would be in 2025.
To do this, you would find the year on the SSA’s COLA rates list when the initial benefit was calculated and multiply the value sequentially by the rates listed until you’ve reached the present-day value. This is the simplest scenario for estimating the fully restored benefit for individuals affected by the WEP reduction. However, these calculations are only accurate if the individual has all the necessary information about the worker’s benefits.
Estimating Survivor Benefits for Widowed Spouses After GPO Repeal
For widowed spouses whose benefits were entirely eliminated by the Government Pension Offset (GPO), estimating the new survivor benefit is fairly simple. This benefit is mainly based on the amount the deceased spouse was receiving before their death. If the surviving spouse knows the deceased’s benefit, it can be adjusted for Cost-of-Living Adjustments (COLAs) from the year of death to the current year to determine the present survivor benefit.
However, there is an exception if the deceased spouse filed for benefits before reaching Full Retirement Age (FRA) and received less than 82.5% of their Primary Insurance Amount (PIA). If the surviving spouse claims widow(er) benefits in a way that results in a reduction of less than 17.5%, the minimum survivor benefit will be 82.5% of the deceased spouse’s PIA.
Let’s look at an example: Martha is a 78-year-old retired school teacher who currently receives no Social Security benefit due to the GPO. Her husband Mike began collecting his Social Security benefit at age 64, one year before his FRA of 65, so his benefit was $3,220 at the time of his death in 2022. Mike’s benefit represents 93.33% of his PIA due to early retirement, and since this is above the minimum 82.5% benefit limit, the survivor benefit rule does not apply.
With the repeal of the GPO, Martha will now be entitled to collect her 2025 survivor’s benefit. To estimate this, we’ll use Mike’s benefit from 2022 and manually adjust it for the COLAs experienced in 2023 and 2024, which were 3.2% and 2.5%, respectively.
For Martha, who has been collecting $0 to this point, she will now be entitled to collect: $3,220 (Mike’s benefit at death) × 1.032 × 1.025 (COLAs) = $3,413.86 per month. This is sure to come as a massive relief to Martha as she continues her retirement.
Estimating The Spousal Benefit After The GPO Repeal
Estimating spousal benefits is a bit more complex than survivor benefits because they are based on the Primary Insurance Amount (PIA) of the primary earner, not the actual benefit they are currently receiving. If the primary earner’s current benefit is lower than their PIA (due to early filing) or higher than their PIA (due to delayed filing), the benefit must first be adjusted back to the PIA before calculating the spousal benefit. This involves removing any reductions or delayed retirement credits included in the primary earner’s current benefit. If the non-covered spouse files for spousal benefits at or beyond FRA, they will receive 50% of the earner’s PIA. However, if the spouse files before their FRA, the benefit will be reduced as follows:
25/36% per month for the first 36 months before FRA.
5/12% for each additional month before FRA.
Lena, who receives a non-covered pension of $3,450 per month, has never filed for spousal benefits because the GPO reduced her spousal benefit to $0.
Now, at age 74, Lena is well past her FRA, meaning she is entitled to receive the full 50% of Ryan’s PIA. However, we don’t know Ryan’s PIA because it isn’t listed on his annual Social Security statement, so we need to do some calculations.
Ryan’s current benefit amount is $3,933, and he received delayed retirement credits for filing at age 70, 4 years after his FRA of 66. Thus, we can calculate his PIA by adjusting his current benefit downward by the delayed retirement credits he received.
Based on Ryan’s year of birth, his delayed retirement credits equal 8% per year of delayed benefits, or 8% × 4 years = 32% total.
This means Ryan’s current PIA is $2,979.55, and Lena’s spousal benefit for 2025 would now be half of this amount. So instead of the $0 she had previously been eligible to collect, she will now have a monthly Social Security income of $1,489.77.
I’m sure if you’ve made it this far through the article, you can see just how powerful these legislative changes are for current and future retirees. The effects vary from individual to individual, some benefiting hundreds more in monthly retirement income, to others experiencing thousands in income now able to be realized due to the GPO repeal.
I am very happy to see this act having been passed and the expected relief it is bringing to my clients. As I mentioned before, it is unclear exactly how long it will take for full benefits to be restored, as the SSA has to recalculate and process payments for the millions affected by these two laws. However, they have signaled that it will take approximately a year, maybe longer, to have everyone’s benefits brought current with the new laws.
If you have a question or topic you’d like considered for a future episode/blog post, you can request it by going to www.retirewithryan.com and clicking on "Ask a Question."
As always, have a great day, a better week, and I look forward to connecting with you in the next blog post, podcast, YouTube video, or wherever we have the pleasure of connecting!
Written by Ryan Morrissey CFP®, CLU®, CHFC®, CMFC
Founder & Principal Wealth Advisor of Morrissey Wealth Management
Host of the Retire with Ryan Podcast
