A boon for US workers or 'incredibly irresponsible'? Expert slams Social Security Fairness Act, says it will lead to 'deeper and faster' benefit cuts — while millions stand to gain from it

What's the Social Security Fairness Act?

The Social Security Fairness Act makes it possible for those who opted out of Social Security at some point during their career to receive more retirement benefits. It does this in two ways.

First, it gets rid of the Windfall Elimination Provision, which could reduce benefits for workers who get pension or disability benefits from an employer that doesn't collect Social Security taxes — such as public service employees. The act also eliminates the Government Pension Offset, which could reduce spousal benefits if you get retirement or disability income from government-based work that doesn't require you to pay Social Security taxes.

Smith explained that around 4% of employees contribute to non-covered pensions instead of Social Security. Some of these workers also at one point had jobs that did pay into the system or are married to people who do pay Social Security taxes. Under the new rule changes, these workers could receive "overly generous" benefit checks, Smith claims, partly funded by those who regularly paid into Social Security.

Proponents of the bill say the old regulations were unfair to government workers who previously contributed to Social Security. The rules penalized those who decided to enter public service and become firefighters, police officers, postal workers and teachers.

Some critics of the bill agree the regulations struck down needed reform, however, they argue the act will worsen Social Security's finances. The program's trust funds are already projected to run dry as late as 2035, at which point it may begin doling out reduced benefits. Now, Smith says he's concerned the bill "will actually lead to deeper and faster automatic benefit cuts for those of us who have been paying into Social Security for decades."

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What can Americans do?

Smith listed a number of Washington, D.C., think tanks — which are often in disagreement — that are aligned in opposition to the legislation. Such discussions serve as a reminder of the importance retirees should place on savings outside Social Security.

For one thing, without government action to shore up the program's finances, the possibility of Social Security benefit cuts is very real, with or without this bill. It's up to the politicians to do something about it.

One of the think tanks Smith mentioned, the Committee for a Responsible Federal Budget, estimates the Fairness Act will hasten Social Security's insolvency by six months and further reduce lifetime benefits for retirees. But there are other things that may impact the program's finances in the near future. Experts believe some of President-elect Donald Trump's election campaign promises could also accelerate a cash shortfall.

Putting money into retirement plans like a 401(k) or IRA can give you some peace of mind knowing you'll have money available to you outside of Social Security.