A new Republican-backed proposal in Congress would allow millions of older Americans to earn more money from work without seeing their Social Security benefits reduced.
The Senior Citizens’ Freedom to Work Act would eliminate a long‑criticized rule that penalizes people who claim benefits early and continue working.
The legislation was introduced in the House by Representative Greg Murphy of North Carolina and backed by Senate companion legislation from Senator Rick Scott of Florida earlier this month.
“American seniors’ ability to earn income and enjoy the dignity of work should not be penalized by arbitrary parameters to receive Social Security benefits,” Murphy said in a statement.
Why It Matters
Under current law, people who claim Social Security before reaching full retirement age can see their benefits reduced if they earn more than a set amount from work, even though those withheld benefits are later credited back after full retirement age.
Lawmakers behind the new bill argue many seniors are unaware of that adjustment and instead limit their earnings or exit the workforce to avoid short‑term cuts to their monthly checks.
What To Know
The bill would repeal the Social Security “retirement earnings test (RET),” a provision that reduces benefits for some working seniors who have not reached full retirement age.
“Current law unnecessarily complicates seniors’ right to access the benefits they paid into for the entirety of their careers and must be done away with,” Murphy said. “While certain guardrails are in place to ensure the viability of Social Security and incentivize participation in the workforce, the Retirement Earnings Test does neither and is a bureaucratic hurdle that does more harm than good.”
Murphy said the change would remove a financial disincentive to work at a time when millions of older Americans remain employed out of necessity. However, some critics say the proposal raises questions about costs and the long‑term outlook of the Social Security Trust Fund.
“At some point, lawmakers need to focus on funding Social Security, not continuing to chip away at it,” Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek.
“If this gets passed, it’s another hit to the system. And with the current direction of Social Security, I wouldn’t bet against this being one more step toward accelerating its long-term strain.”
Under current law, Social Security beneficiaries who start collecting retirement benefits before reaching full retirement age can see their monthly checks reduced if they earn more than a set annual limit from work.
In 2026, beneficiaries under full retirement age can earn up to $24,480 before the earnings test applies. For every $2 earned above that threshold, $1 is withheld from benefits. A higher limit applies in the calendar year someone reaches full retirement age, after which earnings no longer reduce benefits at all.
The Senior Citizens’ Freedom to Work Act would repeal the retirement earnings test entirely, allowing people who claim Social Security early to work and earn unlimited income without triggering benefit reductions.
“I’m still amazed how many seniors don’t know the government is literally penalizing them for working,” Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek. “It’s called the Retirement Earnings Test. And it’s one of the most misunderstood traps in the entire Social Security system.”
Who Would Benefit
According to backers of the legislation, the repeal would mainly affect working seniors who claim Social Security before full retirement age, including older workers in physically demanding jobs, small-business owners and people supplementing fixed incomes due to rising living costs.
While estimates vary, roughly four in 10 Social Security beneficiaries have earnings from work at some point, according to labor force and Social Security data. Not all of those workers are subject to the earnings test, but repealing it would remove uncertainty and complexity for millions of people.
“It’s not just the money withheld. It’s the behavior it creates,” Ryan said. “The RET doesn’t just reduce benefits. It actively discourages seniors from staying in the workforce at exactly the moment we need experienced workers most.”
Is the Bill Likely to Pass?
Despite growing attention to the issue, the proposal faces long odds in a divided Congress.
The House version of the bill was introduced in April and referred to the Ways and Means Committee, while the Senate companion measure has been sent to the Finance Committee. As of late April, no votes have been scheduled on either measure.
What Happens Next
The new bill arrives as Social Security faces mounting financial and political pressure.
According to trustees’ projections cited in recent coverage, the program’s retirement trust fund is expected to face a funding shortfall in the next decade without congressional action, raising the possibility of across‑the‑board benefit reductions if no changes are made.
“The industry talking point is ‘don’t worry, you get it back.’ Technically true. The withheld benefits get credited to your record when you hit full retirement age,” Ryan said. “But tell that to the senior who needs that money now, not in three years. Cold comfort doesn’t pay utility bills.”
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