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The big changes

The act repeals two regulations — the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).

The WEP, enacted in 1983, reduced previously earned benefits for retired workers who received pensions from employers that didn't withhold Social Security taxes, including public service workers. The GPO, adopted in 1977, reduced spousal benefits for those who received retirement or disability income from government-based work that didn't require the payment of Social Security taxes. Their purpose was to reduce any unintended advantage workers might have received raking in a pension on top of benefits.

Now, these workers won’t receive the same reduction benefits. If you’re a former public service employee or the spouse or widow of one, your monthly Social Security check could be larger.

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What to do next

Right now, if you’re one of the lucky beneficiaries, there’s not much you can do but sit tight and wait for the changes to take effect. If you’re not sure you qualify, you can contact the Social Security Administration.

In the meantime, you may want to consider what to do with the added benefits, which is estimated to be an average $360 increase for retired workers (more for surviving spouses). If you’ve been operating without an emergency fund, now may be the time to build one. This can help protect you from an unexpected expense in the future. You can also look at paying down any high-interest debt.

Whatever you want to do with the money, think carefully about how you can put it to use best. That, and whether you may need to alter the amount you need to withdraw from your other accounts.

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Sarah Li-Cain, AFC Freelance contributor

Sarah Li-Cain, AFC is a finance and small business writer with over a decade of experience.

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