Social Security Fairness Act

How Municipal Workers Will Win in 2025

The Social Security Fairness Act is now the law of the land.

President Biden signed it into law in January 2025.

This landmark legislation allows employees of state and municipal employers to collect both their pensions from municipal employment and full Social Security benefits if they qualify through private-sector work. For millions of hardworking Americans, this is a monumental shift that recognizes and supports the financial needs of those who dedicate their lives to public service while also contributing to the private sector. There are four key reasons why this change is so important.

1. It Benefits Middle-Class, Hardworking Americans

Municipal employees, including those in police, fire, education, and town administration, are the backbone of our communities. These individuals work tirelessly in middle-class roles, often putting in decades of service to ensure our safety, education, and the smooth operation of local government. However, many of these workers also have aspirations for a second career.

For instance, if someone retires from a town job after 30 years of service at the age of 50, they still have plenty of time and energy to engage in productive work in the private sector. By working an additional 10 years (or 40 quarters), they can qualify for full Social Security benefits by the minimum age of 62. This opens up opportunities for retired municipal employees to continue contributing to society in new and meaningful ways, whether by leveraging their skills in a less physically demanding role or by pursuing a lifelong passion.

2. Greater Financial Security in Retirement

With the decline of traditional pensions and increasing concerns over retirement security, this change offers a significant boost to many families. The escalating costs of healthcare and everyday living make it challenging for retirees to rely on a single source of income. However, the ability to draw from two pensions—a municipal pension and Social Security—can lead to a more comfortable and financially secure retirement.

For example, consider a retiree who collects $40,000 annually from a municipal pension and an additional $35,000 from Social Security. Together, this income totals $75,000 per year, which is roughly equivalent to having $2,000,000 in the bank earning 4% annual interest. For many retirees, this dual-income approach transforms what could be a modest retirement into a stable and enjoyable one.

3. Protection for Families

This change also provides an essential safety net for families. In cases where a breadwinner becomes ill or passes away, the survivor benefits offered through Social Security can make a critical difference. Before this law, many municipal employees were subject to the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which significantly reduced their Social Security benefits. These provisions were especially harmful to families in times of crisis. Now, the full survivor benefits will apply, ensuring that families can access the resources they need to navigate difficult times.

This protection strengthens the financial resilience of families and highlights the importance of aligning retirement benefits with the realities of modern life. By eliminating outdated provisions, the Social Security Fairness Act creates a system that better serves those who have worked hard in both public and private sectors.

4. Economic Benefits and

Workforce Solutions

The new law also has broader implications for the economy. By allowing municipal retirees to collect full Social Security benefits, the legislation incentivizes more workers to pursue second careers after retiring from their first. For many, this means transitioning from physically demanding jobs to less taxing roles later in life. These workers bring valuable experience and skills to their new positions, helping to address labor shortages in various industries.

For example, a retired firefighter might choose to work as a safety consultant, or a retired teacher could become a private tutor or mentor. These second careers not only provide personal fulfillment but also keep experienced individuals engaged in the workforce. This shift benefits employers who are struggling to find qualified workers and supports a healthier, more dynamic economy.

Addressing Concerns About Increased Costs

While the Social Security Fairness Act is a significant step forward, it does come with some challenges. The elimination of the WEP and GPO provisions means that the Social Security Administration (SSA) will now pay out more benefits annually. This increase in payouts could accelerate the need for broader reforms to the Social Security system.

Before this change, Social Security already faced funding challenges, with projections indicating the need for reform by 2033. Now, the urgency to address these issues may move the timeline forward to 2030. However, these challenges are not insurmountable. Several straightforward adjustments could ensure the long-term sustainability of the system.

Potential Solutions to Strengthen Social Security

There are several practical ways to address the financial challenges facing Social Security:

Increase the FICA Tax Rate

• Currently, the Federal Insurance Contributions Act (FICA) tax stands at 12.4%, split evenly between employers and employees. Raising this rate to 14% would generate significant additional revenue, helping to shore up the system for future generations. While a slight increase in payroll taxes may be unpopular initially, it is a relatively modest adjustment that could make a significant difference in the program’s stability.

Raise the Minimum Age for Benefits

• Increasing the minimum age for Social Security benefits from 62 to 65 could also alleviate financial pressure on the system. By encouraging individuals to work longer, this change reflects the realities of increased life expectancy and modern healthcare, allowing the program to stretch its resources further.

Adjust the Full Retirement Age for Younger Workers

• For younger generations entering the workforce today, life expectancy is higher than ever. Raising the Full Retirement Age (FRA) to 70 for these individuals could ensure the system remains solvent while aligning benefits with contemporary lifespans. This change would not affect current retirees or those nearing retirement, making it a fair and forward-thinking solution.

Conclusion

The Social Security Fairness Act represents a long-overdue victory for hardworking Americans who have contributed to both public and private sectors. By allowing municipal employees to collect both their pensions and full Social Security benefits, the law addresses key issues of fairness, financial security, and economic growth. While the increased payouts may require adjustments to the broader Social Security system, these challenges can be addressed through sensible reforms.

For millions of retirees, this change offers the promise of a more comfortable and secure future. It recognizes the value of their contributions to society and ensures that they are not penalized for working hard in both public and private roles. Moving forward, policymakers must continue to work toward solutions that strengthen Social Security for all Americans, balancing fairness, sustainability, and the evolving needs of our workforce.

The Social Security Fairness Act is more than just a new law; it is a testament to the resilience and determination of America’s working class.