From a press release:
Kilolo Kijakazi, Acting Commissioner of Social Security, announced that the agency will offer people the choice to self-select their sex on their Social Security number (SSN) record. The agency anticipates this option will be available in the fall of 2022. ...
People who update their sex marker in Social Security’s records will need to apply for a replacement SSN card. They will still need to show a current document to prove their identity, but they will no longer need to provide medical or legal documentation of their sex designation once the policy change becomes effective. SSN cards do not include sex markers. ...
This appears to be part of a larger Biden Administration effort to ease the lives of transgender Americans.
Why should Social Security even bother to collect gender information? Prohibitions on same sex marriage used to affect benefits payments but that was external to Social Security and those prohibitions are now gone. Social Security benefit payments themselves have been gender neutral for many decades.