The Social Security Administration (SSA) has begun issuing retroactive payments to 3.2 million Americans, including many former police officers, firefighters, teachers, and other government employees and their spouses. These payments result from the Social Security Fairness Act, which former President Joe Biden signed in the final days of his term. The act eliminated two key legal provisions, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which had long reduced the benefits paid to certain Americans receiving pensions from employers based on work not covered by Social Security.
The SSA has already paid more than $7.5 billion in retroactive benefits to over 1.1 million people, with an average payment of $6,710. These payments began in late February, and the SSA has prioritized issuing the funds quickly using automated processing. Complex cases requiring manual review will take longer to process.
Beginning in April, affected beneficiaries will also receive their permanent monthly benefit boosts. The exact benefit increases will vary depending on each person’s income history and how much was withheld due to the WEP and GPO in the past. The average affected senior will receive $360 more monthly, though some could get $1,000 or more monthly.
The SSA will deposit any retroactive payments owed to the bank account it currently has on file. If this isn’t where the money should go, payment information must be updated with the SSA as soon as possible. This can be done through a personal online account, by calling the SSA, or by visiting a local Social Security office.
If benefits haven’t been signed up for, an application must be submitted before any money is received.
Social Security retroactive payments issued
The retirement benefit application is available online, but the spousal benefit application requires a phone call to the SSA or a visit to a local Social Security office.
The SSA asks that people wait until April to reach out with any questions about their retroactive payments. Questions about new monthly benefit amounts should also wait until after the April payment is received, as the payment that hits accounts in March won’t reflect the changes. Some affected seniors may have to wait up to a year to get the extra funds they owe.
In certain complex cases, the SSA will have to process the payment adjustments and retroactive payments manually, which will take time. The SSA may request more information about pension amounts to ensure it adjusts payments correctly. Responding to these requests promptly will help you receive due benefits quickly.
However, financial advisers warn that this increase in benefits could also result in additional taxes. The tax owed on Social Security benefits depends on the total income, including half of the Social Security benefits received in the taxable year. Even if only one spouse receives Social Security benefits, both incomes must be considered when filing jointly.
Beneficiaries can take steps to minimize their tax liability, such as income averaging, utilizing Qualified Charitable Distributions from IRAs, reducing withdrawals from retirement accounts or harvesting tax losses in brokerage accounts, and investing wisely. Financial experts suggest using 20-25% of the retroactive payment for personal enjoyment and using the rest for economic growth and stability. For more information on Social Security benefits and updates, visit the official SSA website or contact their offices directly.
Image Credits: Photo by Mika Baumeister on Unsplash
