Personal Finance

They fought for Social Security Fairness Act. Now they wait for benefit increases

Published

4 days ago

February 16, 2025

Business Finance News

President Joe Biden after he signed the Social Security Fairness Act at the White House on Jan. 5 in Washington, D.C.

Kent Nishimura | Getty Images News | Getty Images

The biggest changes to Social Security in years were signed into law on Jan. 5.

For more than 3.2 million individuals, that will mean bigger benefit checks. And in some cases, the change will qualify them for Social Security benefits.

The new law, the Social Security Fairness Act, repeals two provisions that previously reduced Social Security benefits for individuals who receive pension income based on work where employers were not required to withhold Social Security payroll taxes.

They were the Windfall Elimination Provision, which was enacted in 1983, and the Government Pension Offset, which was signed into law in 1977. They were federal laws that reduced Social Security benefits for people who received pensions from noncovered employment. Both were repealed by the Social Security Fairness Act.

Among those affected include certain teachers, firefighters and police officers, federal employees, and workers covered by a foreign social security system.

Benefit increases may range from “very little” to more than $1,000 per month, according to the Social Security Administration.

Those increases apply to future monthly checks, as well as retroactive benefits payable since January 2024.

The Social Security Administration “expects that it could take more than one year to adjust benefits and pay all retroactive benefits,” the agency says on its website.

Nevertheless, advocates who fought for the change for years — some of whom will see their own benefits increase — say the signing of the bill was a victory, even as many beneficiaries face an indefinite wait for the extra money.

‘It’s going to take some time,’ a former teacher said of the changes

Roger Boudreau, a 75-year-old former English teacher and president of the Rhode Island American Federation of Teachers retirees chapter, had been to the White House before through his work in union activism over the past 50 years.

But witnessing the signing of the Social Security Fairness Act in January was the “highlight of my life,” he said.

When Boudreau dies, he hopes his role as a founding member of the National WEP/GPO Repeal Task Force is included in his obituary.

“It was such an incredibly important piece of legislation that affected so many people who’ve been so deeply wronged for so many years,” Boudreau said. (To be sure, many retirement policy experts oppose the new policy.)

Boudreau estimates he personally has been losing about $5,000 per year in retirement due to a penalty of about 40% on his earned benefits for the past decade.

Boudreau taught for 30 years on a variety of subjects including world and British literature and earned a pension toward retirement.

To supplement his income, he took on a variety of extra jobs where he paid into Social Security, working as a taxi driver, selling swimming pools and helping at bakeries over the holidays.

“When I started teaching in 1971, my salary was $7,000 [a year],” Boudreau said. “I had an infant child. If I had two, I would have been eligible for food stamps.”

In addition to the extra work while teaching, he also paid into Social Security when he worked in high school and college. If Boudreau had two more years of earnings, he would have been able to escape the penalty to his benefits, he said.

Now, he’s waiting on the Social Security Administration to find out how large his benefit increases will be.

“We understand that it’s going to take some time,” said Boudreau, who also serves as a task force liaison to the American Federation of Teachers.

In the meantime, the group is advising its retirees to make appointments with their local Social Security office to make sure their information is up to date.

Firefighter hoped benefits would help in retirement

Carl Jordan, a retired Canton, Ohio, fire captain, first found out his Social Security benefits would be reduced when he looked into retiring.

The reductions were a surprise to Jordan, who over a 33-year career started as a firefighter and worked his way up to serve as a medic and finally a captain.

While he earned a pension from that work, he also paid into Social Security through other work. He started as a phlebotomist working in blood donation and then trained as a apheresis technician to collect blood products for the treatment of cancer and other diseases.

“The whole reason for me working the second job was it contributed to the community and it also aided me in taking care of my family at the time,” Jordan said.

“Firefighter wages weren’t that great, and I had hoped that Social Security would supplement my retirement income when I got there,” he said.

Fiserv CEO on the nomination to Social Security Commisioner role

Today, Jordan, 73, estimates the reductions have cost him about 2½ years on his mortgage, or around $27,000 excluding interest.

The extra Social Security benefit money will help him pay off that mortgage a little sooner than expected, as well as pay for home improvements, he said.

Still, he doesn’t know exactly how much more benefits he will receive.

Jordan, who attended the January bill signing in Washington, D.C., spoke with a Social Security administrator there who said they could not provide more information on timing or the amount of benefit increases. A month later, he is still waiting for more information from the agency.

Nevertheless, Jordan said he was proud to witness a change he never expected to see in his lifetime, even after advocating for it for almost 16 years.

“To be there representing the profession that I had spent my life serving was an experience everyone should have,” Jordan said.

18-year-old lobbied on behalf of his grandmother

Eliseo Jimenez, who walked from Lubbock, Texas to Washington, DC, to discuss Social Security issues with government officials, leaves after being introduced by President Joe Biden during a signing ceremony for the Social Security Fairness Act at the White House.

Chris Kleponis | Afp | Getty Images

At 18 years old, Eliseo Jimenez of Lubbock, Texas, may be the youngest to have lobbied for the Social Security Fairness Act.

His grandmother, a former teacher, had to rely mostly on her own pension as her source of income before the new law. Other family members who work in law enforcement were also affected by the provisions.

To call attention to the need for change, Jimenez last summer spent 40 days walking from Texas to Washington, D.C. Because he was under 18 at the time, he was not able to check into hotels or motels on his own, which forced him to sleep outside for several nights.

His efforts helped bring attention to the issue, he said.

“I had a lot of people email me and call me, supporting me and supporting the bill itself,” Jimenez said.

Last month, Jimenez returned to Washington, D.C., again, this time to witness the signing of the Social Security Fairness Act. At the event, then President Joe Biden led a chorus of other lawmakers and attendees to sing “Happy Birthday” to Jimenez. It was “pretty cool,” he said.

Since the changes became law, he has heard from his grandmother, neighbors and residents from other states like Virginia and Tennessee who are affected.

“They said it’s like amazing,” Jimenez said. “It’s life-changing.”

The win has inspired Jimenez, a high school senior who plans to attend college next year, to keep pushing for Social Security reform. He plans to complete another walk in Texas next month to call attention to the issue.

“I want to keep on being involved,” Jimenez said. “I want to keep on advocating for it.”

Don’t miss these insights from CNBC PRO

Personal Finance

DOGE purge at FDIC threaten nation’s banking system

Published

5 hours ago

February 20, 2025

Business Finance News

U.S. Sen. Elizabeth Warren (D-MA) speaks to a crowd gathered in front of the U.S. Treasury Department in protest of Elon Musk and the Department of Government Efficiency on Feb. 4, 2025 in Washington, DC.

Anna Rose Layden | Getty Images

In response to a request from Sen. Elizabeth Warren, the Federal Deposit Insurance Corp. will review President Donald Trump‘s recent move to lay off more workers at the watchdog agency.

Backed by the Trump administration, Elon Musk and his advisory group, the Department of Government Efficiency, reduced the FDIC staff by around 1,000 employees so far this year through buyout offers and the layoffs of probationary employees, according to reports. The additional firings were part of a larger effort to shrink the federal bureaucracy.

The FDIC is already severely understaffed, which “threatens the stability of the banking system,” Warren, D-Mass., said in a letter sent on Feb. 10 to Inspector General Jennifer Fain and shared exclusively with CNBC. Senators Raphael Warnock, D-Ga., Chris Van Hollen, D-Md., and Lisa Blunt Rochester, D-Del., also signed the letter.

Fain responded to the lawmakers in a letter dated Feb. 19, which was also shared exclusively with CNBC, saying “the full effect and impact on the structure and mission of the FDIC due to the hiring freeze, deferred resignations, and any reshaping and restructuring remain to be seen.”

Further, Fain said, “we will be adapting our oversight work to better understand and determine the effect of recent changes and their impact on the FDIC to maintain stability and confidence in nation’s banking system.”

In a statement Thursday, Warren said she was “pleased that the FDIC Inspector General will review the threats to the stability of the banking system caused by the Trump Administration’s recent buyouts, terminations, and job rescissions to bank examiners and other FDIC staff.”

“These cuts threaten the reliability and integrity of federal deposit insurance and inhibit the FDIC’s capacity to ensure the stability and confidence that underpin our nation’s banking system,” she said.

Risks of ‘a shortage of cops on the beat’

In the initial letter to Fain, the senators said staffing shortages directly contributed to Signature Bank‘s failure in March 2023.

The lack of examiners “led to a series of supervisory delays, canceled or postponed exams, and quality control issues in the supervision of Signature,” the letter said.

Former FDIC chair Sheila Bair: Eliminating the FDIC would be a mistake

“The lesson learned in this case was that a shortage of cops on the beat can threaten the safety and soundness of the banking system and pose risks to the Deposit Insurance Fund,” the letter stated.

The incident marked the largest U.S. banking failure since the 2008 financial crisis, and one of the biggest bank failures in U.S. history. The unexpected shutdown also caused widespread concern among consumers about their deposits, their bank and the banking system.

Subscribe to CNBC on YouTube.

Personal Finance

High costs, economic worries have homebuyers retreating

Published

7 hours ago

February 20, 2025

Business Finance News

monkeybusinessimages | Getty

There are signs that the housing market is swinging to favor buyers. However, renewed worries about the economy are holding some buyers back.

On the upside for homebuyers, home price growth has slowed and mortgage rates have retreated from recent peaks.

The median sale price for homes was $375,475 in the four weeks ending February 16, up 3.7% from a year prior, according to Redfin, a real estate brokerage firm. That is the smallest increase in nearly five months.

Meanwhile, the average 30-year fixed rate mortgage inched down to 6.87% the week ending Feb. 13, per Freddie Mac data. That’s the lowest so far in the year, and down from the latest peak of 7.04% in January.

However, “buyers are still faced with this massive affordability challenge,” said Orphe Divounguy, a senior economist at Zillow.

Mortgage applications for the week ending February 14 fell 6.6% from a week earlier, according to data from the Mortgage Banker’s Association. Experts forecast January home sales data — set to come out Friday — to show a decline.

On top of relatively high costs, some buyers could be having second thoughts as uncertainty about the broader economy creeps in, according to Chen Zhao, an economist at Redfin.

“A lot of it is coming from the White House,” she said of the reasons that have buyers worried.

Promising signs in the housing market

Some factors in the housing market are giving buyers more room to negotiate prices, according to experts.

For one, inventory is growing as more owners put their homes up for sale. With more options available, buyers have “a little bit more bargaining power in the market,” Divounguy said.

According to Redfin data, there were 564,642 new home listings in January, up 1.9% from a month prior and 4.7% higher from a year earlier. New home listings hit the highest level since July 2022.

There's an opportunity for homebuyers right now, says Sotheby’s Daniel Heider

Some home sellers are cutting their asking prices, too. The typical home is selling for 2% less than its asking price, the biggest discount in two years, per Redfin data.

Buyers worry about the economy, job loss

Some buyers are rethinking their plans given broader economic uncertainty, experts say.

As of mid-February, thousands of workers across multiple federal agencies and departments have been laid off as part of President Trump’s aim to reduce the government workforce.

This can make people who either work directly with the government or are connected through contract work or federal funding “nervous that there could be big changes on the horizon,” Zhao said.

“They are worried about job security,” said Zhao, which takes a home purchase off the table.

“The first thing you might do is hold off on a really big purchase because you’re worried about financial security,” she added.

A lot of it is coming from the White House.

Chen Zhao

head of economics research at Redfin

The anxiety doesn’t stop there — the possibility of trade wars and drastic changes in government spending may leave Americans wondering “what’s next?” Zhao explained.

Trump signed a presidential memorandum laying out his plan to impose “reciprocal tariffs” on foreign nations. The plan allows the U.S. to treat other countries’ non-tariff policies as unfair trade practices that warrant tariffs in response.

For consumers, the prospect of higher prices on everyday items and the potential for inflation to accelerate may make them hesitate to invest in a new home.

How to navigate the buyers’ market

If you’ve been in the market for a while and you see a house that you really like, try to negotiate hard on the price and see where it goes, Zhao said.

If the home seller isn’t open to lowering the asking price, see if they can cover additional expenses like closing costs or to pay for the buyer’s real estate agent fees.

Those can be valuable concessions.

Closing costs can run between about 2% and 6% of the loan amount, according to NerdWallet. If you take out a $300,000 mortgage, you could pay from $6,000 to $18,000 in closing costs on top of the down payment.

The average buyer’s agent commission was 2.37% for homes sold in the fourth quarter of 2024, down from 2.45% a year prior, per a data analysis by Redfin.

If not, check out the new builds market — some builders are offering incentives like “in-house lending” and often provide favorable loan terms like lower rates, experts say.

Personal Finance

Americans’ average credit card balance hits $6,580

Published

9 hours ago

February 20, 2025

Business Finance News

Why your grocery prices are still so high

Americans are racking up more and more credit card debt.

Collectively, consumers owe a record $1.21 trillion on their credit cards, the Federal Reserve Bank of New York recently reported.

The average balance per consumer now stands at $6,580, up 3.5% year over year, according to a separate quarterly credit industry insights report from TransUnion.

Despite the uptick, the rate of change has slowed considerably, said Charlie Wise, TransUnion’s senior vice president of global research and consulting. “Consumers are still continuing to use their credit cards, but the amount they are leaning on them seems to be declining.”

In the wake of the pandemic, higher prices and high interest rates put many households under pressure and prices are still rising, albeit at a slower pace than they had been.

The consumer price index — a key inflation barometer — has fallen gradually from a 9.1% pandemic-era peak in June 2022 to 3% in January. but is still above the Federal Reserve’s 2% goal.

The central bank cut its benchmark rate by a full percentage point in the second half of 2024, but policymakers have been advocating a more cautious pace ahead as they evaluate the overall strength of the labor market and President Donald Trump‘s policy ramifications.

According to meeting minutes released Wednesday, Federal Reserve officials agreed they would need to see inflation come down more before lowering interest rates further, and expressed concern about the impact tariffs may have.

In the meantime, households have largely adjusted to a new normal of high prices and high rates, Wise said: “We’re seeing a bit less of a reliance on credit cards to make ends meet.” After balances soared in 2022 and 2023, the growth in credit card debt has slowed considerably, he said.

Credit card delinquency rates, or those 90 days or more past due, fell year over year for the first time since 2020, TransUnion also found. “This is a good sign,” Wise said.

How to get out of credit card debt

“While most people are generally doing okay, the truth is that many, many Americans are a job loss, medical emergency or some other big, unexpected event [away] from being in a world of hurt,” said Matt Schulz, chief credit analyst at LendingTree and the author of “Ask Questions, Save Money, Make More.”

“It wouldn’t take much for them to go from pretty good to pretty dicey,” he said.

Credit cards are still one of the most expensive ways to borrow money after the Federal Reserve’s string of interest rate hikes lifted the average credit card rate to more than 20% — near an all-time high.

Even as the Fed lowered its benchmark at the end of last year, the average credit card rate barely budged.

“The good news is that there are plenty of options to help you pay down card debt,” Schulz said.

Rather than wait for a modest adjustment in the months ahead from further Fed rate cuts, borrowers could call their card issuer now and ask for a lower rate, switch to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a personal loan, Schulz advised.

“If you’re really struggling, an accredited nonprofit credit counselor can make a huge difference,” he said. “Doing nothing, however, is not an option. It’ll only make things worse.”

Subscribe to CNBC on YouTube.