If you're on Social Security, you may have heard that 3.2 million Americans are due a benefit increase thanks to the passage of the Social Security Fairness Act. This law removed a key provision that had restricted benefits for those who receive a pension from employers that don't pay into Social Security. It also eliminated a rule that restricted benefits to spouses of these workers.

The law was retroactive to January 2024, meaning many of the affected beneficiaries are entitled to back pay as well as a benefit increase. The Social Security Administration is still in the process of making the necessary adjustments. Most affected seniors won't experience any issues during the transition. However, a small group of affected beneficiaries could run into a frustrating issue that might leave them with less than they expected.

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The Social Security Fairness Act ended the Government Pension Offset (GPO)

The Social Security Fairness Act eliminated the Government Pension Offset (GPO). This rule restricted benefits available to spouses of workers who received a non-covered pension. This includes some, but not all, teachers, police officers, and firefighters.

The GPO reduced affected beneficiaries' spousal benefits by two-thirds of the monthly non-covered pension amount. In some cases, it was enough to completely wipe out the spousal benefit, meaning these seniors couldn't claim any Social Security. Now that the GPO is no more, these seniors could be entitled to benefits or to a substantial benefit increase compared to what they were receiving before.

Those who had been receiving some Social Security spousal benefits shouldn't run into any issues. The Social Security Administration (SSA) automated most payment updates in April and expects to have the roughly 800,000 yet-unprocessed adjustments completed by early November at the latest. But things are a little more complicated for those eligible for spousal benefits who weren't previously able to claim anything under the GPO.

Some spouses are limited to six months of retroactive pay

The Social Security Fairness Act says that if you claimed Social Security between January 2024 and when your benefit adjustment took effect, you should be entitled to a one-time retroactive payment. This could be worth thousands or even tens of thousands of dollars for some seniors.

However, there is a small group of spouses who had previously contacted the SSA about applying for spousal benefits only to be told they would have their benefits reduced to zero under the GPO. These seniors claim that government employees advised them not to bother filling out a Social Security benefit application, so they didn't.

Now that the Social Security Fairness Act has passed, these spouses are trying to claim benefits and are being told they only qualify for a maximum of six months of retroactive benefits. This limitation has long been in place for new applicants who want to receive Social Security benefits for months when they were eligible but hadn't applied.

Some U.S. senators, including Bill Cassidy (R-LA), Susan Collins (R-ME), John Coryn (R-TX), and John Fetterman (D-PA), have requested that the SSA change this policy for spouses who were previously discouraged from applying for benefits due to the GPO. They argue that these spouses should be entitled to collect spousal benefits as far back as January 2024, assuming they initially tried to apply for spousal benefits before this date.

So far, there hasn't been any official comment from the SSA on this matter. But if you tried to apply for spousal benefits in the past and were advised not to by an SSA employee, it's worth reaching out to the SSA to inquire about receiving more than six months of retroactive benefits. You can also try reaching out to your Congressional representatives to see if they can offer you any assistance. If possible, present any proof you have, such as when and where the SSA employee told you not to apply for benefits. This may help to strengthen your case.

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More than 2 million Americans saw a Social Security benefit boost this month thanks to the Social Security Fairness Act. If you're one of them, you're probably excited to have the extra cash. Even a few hundred dollars extra per month could make a huge difference, especially if you're heavily dependent on your checks.

You're probably thinking about what you can do with your extra money. But that's not the only thing that deserves your attention. Carve out some time to take the following three steps as soon as you can.

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1. Verify that your new benefit aligns with expectations

Before receiving your Social Security benefit increase, you should have received a notice from the Social Security Administration telling you what your new checks would look like. How much more you get depends on earnings history and benefit type.

The average retired worker affected by the Social Security Fairness Act should get around a $360 monthly increase. Spousal beneficiaries and widow(er)s should see average monthly increases of $700 and $1,190, respectively. Yours likely won't hit the average perfectly, but this should give you a ballpark of what to expect.

If the benefit increase you received in April doesn't correspond with what the Social Security Administration told you you'd receive or if you believe your new benefit wasn't calculated correctly, reach out to the Social Security Administration for clarification. You can do this by phone, email, or in person at a local field office.

2. Review your retirement budget

You may already have some ideas about what you want to do with your extra Social Security checks. You could use the extra money to afford a higher standard of living today or pay off debts if you have any. In these situations, you may continue to withdraw the same amount of money from your personal retirement savings each month.

But if you're worried about running out of savings prematurely, you could also reduce your retirement account withdrawals by the amount of your Social Security benefit increase. This could help you stretch your dollars further. It may also reduce your risk of jumping up to another tax bracket.

There isn't a right or wrong answer here, but it's important to understand how the extra money could affect your finances in the short and long term.

3. Figure out if you'll owe Social Security benefit taxes

A substantial increase in your monthly Social Security benefits could increase your risk of owing Social Security benefit taxes. If you've owed them in the past, you could lose even more to the government going forward. Some people could owe ordinary income taxes on up to 85% of their benefits. This could add up to thousands of dollars.

Sometimes, it's possible to avoid this by reducing how much you withdraw from tax-deferred retirement accounts, like traditional IRAs and 401(k)s. This reduces your adjusted gross income (AGI), which plays a role in how much you owe in Social Security benefit taxes. But this isn't a feasible workaround for everyone.

If you expect you'll owe benefit taxes, you can either set aside money for the tax bill yourself or you can request that the Social Security Administration withhold money from your checks upfront. Consult with an accountant if you're not sure about your best move.

Even if you don't owe Social Security benefit taxes this year, you could owe them in future years as your benefits rise due to cost-of-living adjustments (COLAs). So always remember to plan for this tax, if necessary, when creating your retirement budget for 2026 and beyond.

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If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.

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View the "Social Security secrets" »

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