According to recent reports, a new boost in Social Security checks will benefit only one segment of elderly Americans in the country. Currently, a bill in Congress has enough signatures to force a vote, which might enhance certain retirees’ Social Security payments.
The Social Security Fairness Act seeks to repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) statutes. These two Social Security regulations may lower some retirees’ monthly income, posing extra financial hardships as they enter their golden years.
Understanding the Measure That Could Potentially Enhance Social Security Payments for Seniors in the United States
The Social Security Fairness Act, a nonpartisan measure that would assist retirees who have worked for the government, received 218 signatures as of Thursday afternoon, which is required to put it to a vote. This includes police enforcement officers, firefighters, educators, and other public servants who are regularly affected by the GPO and WEP. The WEP and GPO laws are estimated to have an impact on around 3 million Americans.
According to CNBC, Rep. Garret Graves (R-LA) commented, “We took upon ourselves, in a bipartisan way, something that’s just totally unfair.” This has been going on for almost forty years. In this context, discrimination targets some of our community’s most important professions and contributors.
This means that certain Americans’ pension payouts may be reduced if they are not “covered” because their employers neglected to deduct Social Security taxes. It is crucial to note that having a pension from “covered” work—meaning work for which you paid Social Security payroll taxes—has no bearing on your benefits. According to the AARP website, the vast majority of Americans work in jobs that qualify for Social Security benefits.
Assume you worked for a “non-covered” company (one that did not withhold Social Security taxes) and got a pension, but you also spent enough time in covered employment to be eligible for benefits. Representatives Abigail Spanberger, a Democrat from Virginia, and Graves, a Republican from Louisiana, filed a discharge petition earlier this month, allowing them to demand a vote.
While the WEP impacts 2 million workers and reduces retired workers’ benefits if their employer did not ask them to contribute to the program, the GPO states that over 745,000 Americans have had their benefits lowered. This includes widows and spouses who get a pension from the GPO. Although the bill has more support in the House, experts are skeptical that it will pass the Senate, where it has fewer supporters.
Furthermore, Kevin Thompson, the founder and CEO of 9i Capital Group and a financial specialist, told Newsweek that, while the campaign has received enough signatures to compel a vote, prior attempts to pass the law have failed.
Thompson also stated that he did not expect it would pass because the Windfall Elimination Provision (WEP) was originally meant to prevent individuals from receiving Social Security payouts that were more than the amount they paid into the system. It aimed to align benefits and contributions.
If passed, there would be considerable financial ramifications. The Congressional Budget Office predicted that the move would cost $196 billion over ten years. Benefit cutbacks may begin as early as 2033 due to a financial imbalance at the Social Security Administration.
However, for seniors who lose nearly all of their Social Security income each month due to the GPO or WEP, this might be a big financial game changer. Finally, Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, believes that granting full Social Security payments to a specified population would be extremely beneficial in their post-work years.