Millions of retired government employees and their spouses are about to see a big increase in monthly Social Security benefits.
As one of his last acts in office, President Joe Biden signed the Social Security Fairness Act, which eliminates longstanding policies that reduced a person’s monthly Social Security pension check if they also have income from retiring as a federal, local or state employee.
The bill earned bipartisan support in the U.S. House and Senate.
Who is affected by the Social Security Fairness Act?
The new law affects people who receive two pensions: one from Social Security and the other from working for the government.
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Imagine a person worked for years in the private sector and paid into Social Security. When that person reaches a certain age, they can retire and earn a monthly pension based on their earnings. This is the case for most people.
More: Who can retire in 2025? Find out when Social Security pays out
However, if that person also took a job that is exempt from paying Social Security taxes, like a government job, they likely instead received a separate pension upon retirement. That government pension will then displace some of the retirement money that would normally come from Social Security.
Supporters of the change praised the effect it would have on retired police, firefighters, teachers, along with federal employees who accrued retirement benefits from their government job.
How much will Social Security retirement benefits increase?
In 2023, the Congressional Budget Office estimated that the bill would increase monthly benefits by $360, on average, for 2.1 million Social Security beneficiaries. That’s equivalent to about 3% of everyone receiving Social Security benefits.
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By 2033, the increase will have risen to about $460 per month.
Because the bill also includes spouses of retired government workers, those individuals will also see an increase. CBO estimates that 380,000 spouses and surviving spouses will see an extra $700 a month, on average.
The bill is retroactively dated by one year, so the government will also send a lump sum to recipients to cover missed payments during 2024.
Some retirees could see fewer food stamp benefits
In the event that someone affected by this bill also receives food stamps, also known as Supplemental Nutrition Assistance Program (SNAP), their monthly SNAP benefits will be reduced.
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SNAP benefits are based on a formula that accounts for Social Security income.
The CBO estimates that SNAP benefits will decrease by $2 billion over the next 10 years.
This article originally appeared on Oklahoman: Biden law to boost Social Security benefits for some: What to know