On January 5 President Biden signed into law the Social Security Fairness Act eliminating the WEP and GPO for clients who worked in jobs not covered by Social Security. The passage and signing of the Act was a feel-good moment for politicians, who hailed it as a way for everyone to get their “fair share” and be able to “retire with economic security and dignity,” even if there was a certain amount of misrepresentation in the media implying that the workers who had been subject to the WEP had paid into the system their entire careers. This, as we know, is not true. A person who paid into Social Security for 30 years or more was never subject to the WEP. It was only those who had worked in noncovered jobs that DIDN’T pay into Social Security whose benefits based on other, covered earnings were reduced. In any case, the time for debate is over. The WEP and GPO have been repealed, and now it’s time to get the word out to affected clients.

In one of its last acts of the year, the Senate passed the Social Security Fairness Act, which eliminates the WEP and GPO for people who worked in noncovered jobs. The bill now goes to President Biden for his signature.

As you know, the Windfall Elimination Provision (WEP) applies to people who worked in a job that did not pay into Social Security and who expect to receive a pension from that job, while also working long enough in a Social Security-covered job (10 years) to receive a Social Security benefit based on that work. The WEP reduces the first bend point in the PIA formula from .90 to .40, essentially reducing their Social Security benefit by about $600. Alerting clients to the WEP has been a big part of Savvy Social Security planning, as the WEP reduction is not reflected on clients’ Social Security statement. Without this knowledge, clients would expect their benefit to be as much as $600 more than what they’ll end up receiving.

President-Elect Donald Trump promised not to cut Social Security. During his campaign he even suggested higher-income beneficiaries would be able to keep more of their Social Security income through his proposal to stop taxation of benefits (apparently not considering that eliminating that source of income would cause the Trust Fund to exhaust three years sooner than currently projected). Project 2025, which Trump has distanced himself from but is widely recognized to inform many of his policies, makes no mention of Social Security.

But there is one aspect of Social Security that may be affected by the new Trump administration, and that’s the overall administration of the agency. Trump’s new Department of Government Efficiency (DOGE) has the Social Security Administration in its sights, even though SSA is one of the most efficient of all government agencies. According to recent testimony by SSA commissioner Martin O’Malley, productivity was up 6.2% in 2024 even as the number of new beneficiaries has been soaring. SSA’s staffing is at a 50-year low. SSA made great strides under O’Malley, reducing average call wait times from 42 minutes to 12 minutes, streamlining procedures for overpayments and underpayments, and reducing wait times for disability approvals.

On November 12 the House passed H.R. 82, the Social Security Fairness Act, which calls for an end to the Windfall Elimination Provision and the Government Pension Offset. The vote was decisive, 327-75. It faces an uphill battle in the Senate.

If passed by the Senate and signed into law, it would eliminate both the WEP and GPO for clients who worked in noncovered jobs. According to an actuarial analysis done in July 2022, it would worsen Social Security’s finances and cause the trust fund to exhaust in 2034, one year sooner than current projections.

Social Security checks will be going up by 2.5% in 2025. The increase will take effect in December and be reflected in January checks. Clients will receive their personalized COLA notice by mail in December, or earlier in their online account if they sign up for text or email alerts.

The Social Security wage base will be going up to $176,100, from the current $168,600. This increase is based on the rise in the national average wage index, which rose by 4.43%. The earnings test threshold will be $23,400 ($1,950 per month), up from $22,320 ($1,860 per month). The FRA-year threshold will be $62,160 ($5,180 per month, up from $59,520 ($4,960 per month).

The Social Security Administration (SSA) has announced progress this year to reduce customer burden by transitioning wet (physical) signature requirements to digital signatures for over 30 forms as well as removing the signature requirements altogether for 13 forms. These actions simplify application processes for people, including removing a potential reason for claims to be sent back or denied.

The Social Security Administration is transitioning to a new login system starting in September. Everyone who set up their Social Security accounts before September 2021 will need to log in with their username and password and follow the prompts to switch to a Login.gov account. The agency is making the changes to simplify the sign-in experience and align with federal authentication standards while providing safe and secure access to online services. People who already have a Login.gov account do not need to take any action.

After years of development and months of testing, our new integrated software is now live on this site. Just click on the “Software” tab above.

Key enhancements to the Savvy Social Security Planning software include:

• Integration of the primary calculators, including Spousal Planning, Divorce Planning, Survivor Planning, and WEP/GPO Planning, into a single unified application
• Ability to model complex cases involving dependent benefits
• Greater ease in modeling scenarios for multiple life spans and COLA combinations
• Expanded support for modeling WEP/GPO in all types of client situations
• More control over “Suggested Scenarios”
• Increased capabilities for customizing client reports
• Educational tips integrated throughout the tool
• Improved performance and speed

In its latest blog post SSA says appointments with representatives can now be done online using Microsoft Teams.

To set up an appointment clients would call the main number, (800) 772-1213, and ask for a video appointment. If the representative determines that a video appointment would be an appropriate option, they will set up the appointment. If not, they will conduct the interview over the phone or schedule a regular in-office appointment.

The Social Security Board of Trustees today released its annual report on the financial status of the health of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to have enough dedicated revenue to pay all scheduled benefits and associated administrative costs until 2035, one year later than projected last year, with 83% of benefits payable at that time.

In the 2024 Annual Report to Congress, the Trustees announced:

The Social Security Administration has announced it will decrease the default overpayment withholding rate for Social Security beneficiaries to ten percent (or $10, whichever is greater) from 100 percent, significantly reducing financial hardship on people with overpayments.

The change applies to new overpayments. If beneficiaries already have an overpayment with a withholding rate greater than ten percent and would like a lower recovery rate, they should call Social Security at (800) 772-1213 or their local Social Security office to speak with a representative. If a beneficiary requests a rate lower than ten percent, a representative will approve the request if it allows recovery of the overpayment within 60 months—a recent increase to improve how the agency serves its customers from the previous policy of only 36 months. If the beneficiary’s proposed rate would extend recovery of the overpayment beyond 60 months, the Social Security representative will gather income, resource, and expense information from the beneficiary to make a determination.

A series of articles in ThinkAdvisor has been examining claiming strategies using total lifetime benefits as the measure for optimal claiming. This, of course, is the same principle we use for Savvy Social Security Planning. The software calculates the starting benefit amount for each spouse based on claiming age and adds up all benefits paid over each spouse’s remaining life based on the life expectancies you enter. The scenario that pays the highest total benefits over the couple’s joint life expectancy is deemed the maximum benefit scenario. It’s pure, simple math that provides extremely valuable direction to couples in that it incorporates survivor benefits for the longer-lived spouse, which in turn informs the higher-earning spouse’s claiming age.

A Marketwatch article, This Will Not Save Social Security, tries to make the point that raising the tax cap will not save Social Security. It reads like an effort to manipulate public opinion.

As discussions ensue about the best way to bring the Social Security system into actuarial balance, the raising of the maximum wage base is emerging as a popular solution. In 2024 wages up to $168,600 are subject to the 12.4% Social Security tax, with the employee and employer each paying half and self-employed individuals paying the full 12.4%. Wages over $168,600 are not taxed and are not counted as earnings for the benefit formula.

As the OASDI Trust Fund exhaust date nears, clients may be worried that their benefits will be cut by 20% in 2034. This comes from the 2023 Trustees Report which expressed the system’s shortfall in a way that could be interpreted as an impending benefit cut.

The trustees’ exact words were: “Under the intermediate assumptions, the projected hypothetical combined OASI and DI Trust Fund asset reserves become depleted and unable to pay scheduled benefits in full on a timely basis in 2034. At the time of depletion of these combined reserves, continuing income to the combined trust funds would be sufficient to pay 80 percent of scheduled benefits.”

According to the 2023 Schroders US Retirement Survey, only 10% of non-retired Americans say they will wait until 70 to receive their maximum Social Security benefit payments.

Even worse, 40% of non-retired respondents plan to take Social Security between 62 and 65, thus locking in a permanently reduced benefit.

The choice to forgo larger Social Security payments is a deliberate one, as 72% of non-retired investors—and 95% of non-retired ages 60–65—are aware that waiting longer earns higher payments.

Will benefits really fall in 2034? As the projected year of the OASDI Trust Fund exhaustion draws nearer, interest is growing in how this math problem will be solved. For clues to how or when Congress will act, we turn to several recent news items. One is testimony by SSA chief actuary Steven Goss to the Senate Budget Committee. Another is a bill by Sheldon Whitehouse and Brendan Boyle called the “Medicare and Social Security Fair Share Act.” And a third is a revision to John Larson’s “Social Security 2100 Act,” which extends the sunset date of its provisions to 2034 from 2027, extending solvency to 2066.

While their parents belonged to the “Greatest Generation,” Gen X may soon be carving out a reputation as the “Broke Generation.”

A recent survey conducted by Clever Real Estate polled 1,000 Gen Xers born between 1965 and 1980 to find out how they fare when it comes to personal finances and the road to retirement. A staggering 56% of Gen Xers said they have less than $100,000 saved for retirement, and 22% said they have yet to save a single cent.

When Social Security was founded in 1935, the intent was always for it to be self-financing. “With those taxes in there, no damn politician can ever scrap my Social Social Security program” is how FDR put it. And indeed, the system has been able to pay promised benefits from its dedicated revenue sources—payroll taxes, income taxes on benefits, and interest on the securities in the trust fund—without turning to the federal government for additional funds.

The idea of asking Congress for money in the form of general revenue transfers has always been considered a slippery slope to those who want to preserve Social Security. Do it once and it could lead to more dependence on general revenue transfers, which would subject it to the budget process and someday cause some “damn politician” to scrap FDR’s beloved program.

The Social Security Trustees released their annual report earlier than usual this year, on March 31. The report shows little change from recent years. They now project that the combined OASDI Trust Fund will exhaust in 2034, after which payroll taxes will be sufficient to pay 80% of promised benefits.

The results of the 2023 T3/Inside Information Software Survey are in, and the Horsesmouth Savvy Social Security Planning Calculators received the highest rating in user satisfaction, coming in at 8.70, with the next-closest competitor garnering a score of 8.29.

Since 2008, Horsesmouth has recognized the importance of having a dedicated Social Security planning tool to help clients determine the optimal time to claim benefits. Over the years our calculators have helped thousands of clients maximize their Social Security benefits while helping to shift the general thinking about when to claim. The later-is-usually-better advice targeted to higher-earning spouses can now, thanks to the calculators, be backed up by actual numbers and will result in a generation of widows enjoying higher income in their later years than if those higher-earning spouses had relied on instinct and claimed early.