If This Bill Passes, Social Security Recipients Can Work Without Losing Out on Benefits

A proposed bill in Congress would scrap the "retirement earnings test" and allow those who claim Social Security before age 67 to work without a reduction in benefits. Supporters say the change could boost financial flexibility for seniors, while critics warn that it will further strain an already strained Social Security system.

The current system

There are millions of Americans between age 62 and full retirement age (FRA) who earn a paycheck while collecting Social Security benefits. The current system calls for an automatic benefit reduction each year. For example:

• The annual earnings limit for Social Security beneficiaries who collect benefits before reaching FRA in 2026 is $24,480. For every $2 earned above that limit, the Social Security Administration (SSA) withholds $1 from benefit payments.
• For beneficiaries who reach FRA in 2026, a more generous limit of $65,160 applies for the months leading up to their birthday month, and $1 is withheld for every $3 earned during this time.
• Once a beneficiary reaches FRA, all restrictions are lifted, and they can earn any amount without reducing benefits.

The loss of benefits is not permanent. Once a recipient reaches their FRA, the SSA recalculates their benefits to account for the months their benefits were reduced, adding those funds back in.

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The new bill(s)

Rep. Greg Murphy (R-N.C.)has introduced H.R. 8344, the Senior Citizens' Freedom to Work Act of 2026. This act would eliminate the penalty by repealing the retirement earnings test. A companion bill, called "Experience Matters: Seniors and the Workforce," has been introduced by Sen. Rick Scott (R-Fla.), giving the proposal a push from both the House and Senate.

If enacted, no one who works while receiving Social Security benefits -- regardless of age -- would have their monthly checks docked for earning too much. Seniors could remain employed, claim benefits early, and keep the entire amount of their Social Security payment rather than wait for the withheld portion to be repaid at FRA.

The tricky bit

The bill would do nothing to erase the permanent reduction in benefits experienced by seniors who claim benefits before reaching the FRA. Filing for benefits at age 62, rather than at FRA, results in a 30% reduction in benefits. For example, if a person were due to receive monthly Social Security checks of $2,000 at age 67, their checks would be reduced to $1,400 -- for the rest of their lives.

Social Security spousal benefits paid to the beneficiary's husband or wife would be reduced by an equal amount, meaning a $1,000 monthly benefit would drop to $700.

If the recipient has plenty of other income sources, this reduction may not mean much. However, if they're counting on every dollar to cover living expenses in retirement, claiming Social Security early may not be the best move.

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