Social Security retirees may get larger monthly checks under new plan
A new proposal in Congress could allow some Social Security recipients to keep more of their monthly benefits while continuing to work. Republican lawmakers have introduced legislation that would eliminate a rule that can temporarily reduce Social Security checks for people who claim benefits early and keep earning a paycheck.
The proposal, called the Senior Citizens' Freedom to Work Act, was introduced by Rick Scott and Greg Murphy. The bill would repeal the Social Security Retirement Earnings Test (RET), where people who begin collecting Social Security before reaching full retirement age can see some of their benefits withheld if they earn too much from working. If passed, the change could mean bigger monthly checks for millions of older Americans.
How the current system works
For 2026, retirees who are below their full retirement age can earn up to $24,480 without affecting their benefits. Earn more than that, and Social Security withholds $1 in benefits for every $2 earned above the limit.
For people reaching full retirement age during 2026, the threshold is higher at $65,160, with $1 withheld for every $3 earned above the cap. Once someone reaches full retirement age, the earnings limit disappears entirely. Depending on when you were born, full retirement age currently falls between 66 years and 10 months and 67 years old.
One of the biggest criticisms of the Retirement Earnings Test is that many retirees mistakenly believe the withheld money is gone forever. But it's not. Under current law, Social Security recalculates benefits once a person reaches full retirement age and returns those withheld amounts through larger future payments.
But critics say many seniors either don't know this or intentionally limit how much they work in order to avoid triggering benefit reductions. Hence, supporters of the new bill argue that the Retirement Earnings Test discourages older Americans from remaining in the workforce. Murphy called it a "bureaucratic hurdle" that discourages older Americans from working and earning additional income.
Millions of retirees could be affected
The biggest winners here would be people who claimed Social Security early, beginning at age 62, have not yet reached full retirement age, and continue working while collecting benefits. Under the proposal, these retirees could continue earning income without seeing any portion of their Social Security checks temporarily withheld. According to the latest figures, nearly 75 million Americans receive Social Security benefits, including roughly 54 million retirees.
The ultimate fate of the proposal remains to be seen, as the legislation has been introduced in both the House and Senate. The Senate version currently sits before the Senate Finance Committee, while the House bill is being considered by the House Ways and Means Committee. Like most legislation, it still faces a long road before becoming law.
Source: AL.com
