On January 20, 2025, President Donald Trump's Executive Order implemented the Department of Government Efficiency to support “cost-efficiency initiatives” across multiple government agencies.
But panic ensued when DOGE began targeting the Social Security database. Alarming headlines and rumors claimed that Social Security benefits would be cut, especially for beneficiaries who criticized the Trump administration. Adding to the concern were potential federal agency cuts and their impact on retirement pensions.
If you’re a Fed nearing retirement, some allegations in the news can create confusion and could lead to financial fear-based decision-making. Our advice? Take a breath, read the following, and strategize with qualified CERTIFIED FINANCIAL PLANNERS™, like those with Serving Those Who Serve.
The Social Security Story
As of now, there aren’t Social Security cuts in 2025. But here’s what’s happening.
Repeal of the WEB and GPO
The Social Security Fairness Act of 2024 went into effect in early 2025. Of particular interest to Feds is that the legislation repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Either of these might have decreased Social Security benefits for you or your spouse if you didn’t pay Social Security taxes.
The WEP and GPO disappearances mean a couple of things. First, a higher Social Security payment each month. And second, retroactive payments. The Social Security Administration (SSA) said it’s paid over $7.5 billion in retroactive benefits to more than 1.2 billion impacted by the Fairness Act.
Overpayment Recovery Increases
When Social Security overpayments occur, the SSA gets the money back through deductions from benefits. During the pandemic, clawbacks were capped at 10% of a recipient’s monthly check.
Starting on March 27, 2025, the SSA will resume deducting 100% of the overpayments owed from the monthly payment, which could severely decrease the benefits received.
Protecting Federal Pensions
Another issue generating headlines is President Trump’s Executive Order reinstating Schedule F. In theory, Schedule F allows the President to remove civil service protections, giving him the power to hire and fire Feds at will.
While groups like DOGE can make personnel recommendations, the law prohibits them from directly firing or hiring a Fed workforce. Still, agencies are moving forward with reduction in force (RIF) plans based on Trump’s Executive Order.
Is your CSRS or FERS plan in danger if you’re involuntarily separated from your job? Not necessarily. The pension that you do (or don’t) receive depends on your age and length of employment. You might receive a buyout offer or severance pay. Check with your agency’s human resources department to determine your pension eligibility.
Learn more about your retirement benefits at our No-Cost webinars, featuring Ed Zurndorfer -
Plans to Protect Yourself
Here are steps to help improve retirement resources during these uncertain times.
Review your TSP contribution
If you’re enrolled in a FERS plan, 1% of your salary is automatically contributed to your TSP. However, you can contribute up to 5% during each pay period, with your agency matching 4%. If you’re involuntarily separated from your job, this could provide you with additional funds.
Consider a Roth IRA
A Roth IRA can help generate additional financial resources. Contributing after-tax dollars to such an account means that your withdrawals are tax-free and not subject to Required Minimum Distributions (RMDs).
Review expenses and debt
It’s essential to take stock of your recurring expenditures, mortgage payments, or other debt. Doing so can help determine your financial needs if you undergo involuntary separation or decide to take early retirement.
Be Proactive, Not Reactive
Blaring headlines and hysterical rumors can mean fearful financial decision-making. To avoid this, ignore the frenzy and consider your current and future financial circumstances. Doing so can help maintain your financial health.
Contact the CFPs™ at Serving Those Who Serve for assistance in determining your next and best steps. Our fed-focused experts can help advise you as to the best course of action to support you in your retirement.
To learn more, visit the website at stws.com or email [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
