Recent changes to Social Security, enacted by President Biden, stand to benefit nearly 3 million individuals by increasing their monthly benefits. The Social Security Fairness Act, which received bipartisan support, eliminates previous reductions for certain public sector workers, like teachers and law enforcement, who also receive pension income. These beneficiaries will see average increases of $360 monthly, with additional benefits for spouses and surviving spouses, potentially raising monthly checks by $700 and $1,190, respectively.
While financial advisors view this as a significant boost to retirement income, they caution that the increased benefits may lead to higher tax liabilities and Medicare costs. Beneficiaries could encounter higher taxes, as benefits can be taxed based on income thresholds, and the changes may push some earners into higher tax brackets. The additional income may also affect Medicare premiums, as those with higher incomes pay income-related adjustments on Parts B and D.
Affected individuals are advised to consider consulting financial and tax professionals to navigate these legislative changes effectively. They should also verify their personal information with the Social Security Administration to ensure proper benefit distribution starting in 2024.
