WASHINGTON, D.C. — A new proposal in Congress could make it easier for older Americans to continue working while collecting Social Security retirement benefits.
If approved, the legislation would eliminate the Social Security retirement earnings test, a rule that temporarily reduces benefits for people who claim retirement benefits before reaching their full retirement age (FRA) and continue earning above annual income limits.
Supporters say the change would give retirees more flexibility to remain in the workforce without sacrificing part of their monthly Social Security check. Critics, however, argue that removing the earnings test could increase financial pressure on a program already facing long-term funding challenges.
How the Current Rule Works
Under current law, Americans can begin claiming Social Security retirement benefits as early as age 62.
However, recipients who have not yet reached their full retirement age are subject to annual earnings limits if they continue working.
For 2026:
- Individuals below full retirement age can earn up to $24,480 before the earnings test applies.
- For every $2 earned above that limit, $1 in Social Security benefits is temporarily withheld.
- During the year a beneficiary reaches full retirement age, a higher earnings limit of $65,160 applies before benefits are reduced.
- Once full retirement age is reached, recipients can earn any amount without having benefits withheld.
Importantly, the withheld benefits are not permanently lost. After reaching full retirement age, the Social Security Administration recalculates monthly benefits to account for the months in which payments were withheld.
What the New Bill Would Change
The proposal would eliminate the retirement earnings test altogether.
If enacted, eligible Social Security recipients could:
- Continue working regardless of earnings.
- Receive their full monthly Social Security benefit without temporary reductions.
- Claim benefits before full retirement age without having checks withheld because of employment income.
Supporters believe the change could encourage more older Americans to remain in the labor force while giving retirees greater flexibility in deciding when to begin collecting benefits.
Claiming Early Still Has Long-Term Consequences
Although the legislation would remove the earnings test, it would not change the permanent reduction that applies when retirement benefits are claimed before full retirement age.
For example, someone whose full retirement age benefit would be $2,000 per month could receive approximately $1,400 per month if they choose to begin benefits at age 62.
That lower monthly amount generally remains in place for life, except for future Cost-of-Living Adjustments (COLAs).
Because spousal and survivor benefits may also be affected by the worker’s claiming age, retirement specialists often recommend evaluating both short-term income needs and long-term household finances before filing for benefits.
Supporters and Critics See Different Outcomes
Supporters of the proposal argue that today’s workforce looks very different than it did decades ago.
Many older Americans choose—or need—to remain employed beyond age 62, and they contend the earnings test discourages continued employment by temporarily reducing benefits.
Critics counter that repealing the earnings test could increase Social Security’s costs at a time when the program is already facing projected funding shortfalls in the early 2030s. They argue that lawmakers should weigh any benefit expansion alongside broader reforms aimed at improving the program’s long-term financial stability.
What Happens Next?
The legislation has been introduced in both the House of Representatives and the Senate.
Before becoming law, it must:
- Be approved by the House.
- Pass the Senate.
- Be signed by the president.
As of now, the proposal remains under consideration, and the current retirement earnings test remains in effect.
Bottom Line
A new congressional proposal would allow Americans who claim Social Security before full retirement age to continue working without having benefits temporarily withheld under the retirement earnings test. While supporters say the measure would provide greater financial flexibility, the bill would not eliminate the permanent reduction that comes with claiming retirement benefits early. For now, existing Social Security rules remain unchanged unless Congress approves the legislation.
