Social Security recipients will receive a 2.5% increase in their monthly checks in 2025. Analysts had predicted a 2.5% bump for 2025, which is smaller than increases in the previous two years and reflects moderating inflation. Recipients received a 3.2% increase in their benefits in 2024, after a historically large 8.7% benefit increase in 2023, brought on by record 40-year-high inflation.
Millions of retired teachers, firefighters, police officers, and other public workers will see a boost in their Social Security benefits following the repeal of two provisions that previously reduced payments for those receiving state or local government pensions.
The Social Security Administration (SSA) announced that affected retirees will receive a one-time retroactive payment by the end of March, with higher monthly payments beginning in April.
The backstory:
This change comes after the Social Security Fairness Act was signed into law by former President Joe Biden earlier this year.
The law repealed the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) -- two policies that limited benefits for those receiving other retirement payments.
Previously, the WEP and GPO reduced Social Security benefits for individuals who worked in public service jobs and also qualified for a pension through state or local government retirement programs.
With these provisions repealed, millions of retirees will now receive full Social Security benefits.
By the numbers:
According to the Congressional Research Service, in December 2023:
With these reductions removed, many retirees will now receive a significant increase in their Social Security payments.
The SSA says payments will be distributed in two phases:
The SSA is advising beneficiaries to wait until April before inquiring about the status of their retroactive payments, as processing will occur incrementally through March.
What's next:
The repeal of WEP and GPO is seen as a step toward fairness for public workers, but it also adds financial strain to Social Security Trust Funds, which already face a looming insolvency crisis.
The annual Social Security and Medicare trustees report, released in May 2024, projected that the trust fund would be unable to pay full benefits by 2035. The repeal of WEP and GPO is expected to shorten the insolvency timeline by six months.