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Millions of Americans Got a Social Security Bump in April: 3 Worst Ways To Use the Extra Funds

Josephine Nesbit

Wed, Apr 30, 2025, 10:02 AM 3 min read

Millions of Americans got a Social Security bump thanks to the Social Security Fairness Act, which then-President Joe Biden signed into law in January.

Beneficiaries affected by the Windfall Elimination Provision and the Government Pension Offset, which reduced benefits to certain public employees, saw higher monthly benefit amounts and a one-time payment retroactive to January 2024, Fox Business reported.

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While a bigger check offers a welcome financial boost, how you use those extra funds matters. Without a smart plan, it’s easy to make mistakes that could hurt your long-term financial security.

Here are some of the worst ways to use your extra Social Security funds, according to experts.

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“A particularly dangerous one is using the extra money for unsecured high-interest debt consolidation when you aren’t sure how you will pay it off,” Seann Malloy, founder and managing partner at Malloy Law Offices, wrote in an email. “While this may appear to be a clever short-term fix, it can be a breach of fiduciary duty under SSA guidelines if the recipient is a representative payee, and can create future hardship if unanticipated medical or housing costs surface.”

A representative payee — someone appointed to manage Social Security benefits for a person who can’t do so themselves — must use the funds to meet the beneficiary’s basic needs first. Using benefits for debt consolidation without covering essentials can violate rules and fiduciary duties, according to the Social Security Administration.

Malloy also recommended avoiding speculative investments, such as cryptocurrency or high-risk stocks. While the promise of a quick payoff may be tempting, retirees risk losing the extra funds they’ve received and potentially jeopardizing their financial security.

There’s an even greater risk when a third party is involved. If a representative payee mismanages Social Security benefits, it can lead to legal consequences.

“While the Social Security Administration doesn’t make rules concerning how retirees can spend their benefits, legally speaking, the agency will not give another party access to the cake that makes up the basic needs benefits pie; if elder financial abuse is committed, such foolish financial decisions can lead to criminal charges, especially when a third party is involved,” Malloy explained.

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