Retirement Social Security

54 Million Retirees Could See Their Social Security Change Under This Proposal

A big restriction that applies to Social Security recipients today could change if this bill passes.

By Maurie Backman , Edited by Laura Hohenstein

Updated Nov. 12, 2026

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Many financial experts agree that living on just Social Security can be challenging. The average monthly benefit for 2027 is only $2,170, which amounts to an annual retirement paycheck of roughly $26,000. For many seniors, that's just not enough.

For this reason, some seniors opt to work while collecting Social Security. But depending on your age and how much you earn, that could result in some of your benefits being withheld.

A bill seeks to eliminate that restriction on seniors, and if it passes, it could make it much easier for Social Security recipients to earn money from a job without worrying about temporarily reduced monthly checks.

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How Social Security's earnings test works

While you're allowed to work while collecting Social Security, if you have not yet reached your full retirement age (FRA), you'll be subject to an earnings test. The limits of the earnings test change every year.

In 2027, you can earn up to $25,560 without having any Social Security withheld. Once your earnings exceed that limit, you'll have $1 in Social Security withheld per $2 of earnings.

You can earn a lot more money without having benefits withheld if you'll be reaching FRA by the end of the year but haven't gotten to that age yet. In that case, the earnings limit is $67,920. Once your earnings exceed that limit, you'll have $1 in Social Security withheld per $3 of earnings.

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Social Security's earnings test is often misunderstood

There are several issues with Social Security's earnings test. First, it penalizes seniors who opt to supplement their income with earnings from a job by withholding benefits. But another key aspect of the rule, often misunderstood, can cause seniors to limit their earnings unnecessarily.

Social Security benefits that are withheld for exceeding the earnings test are not lost forever. If you exceed the earnings test threshold and your benefits are withheld, that money will be repaid to you once you reach FRA. At that point, the Social Security Administration (SSA) will recalculate your monthly benefits and return that withheld money to you in the form of larger checks.

But many people assume that exceeding the earnings test means giving up Social Security income permanently. And because of that, they intentionally try to keep their wages below the earnings test limits.

That's a problem for two reasons. Not only might higher wages help seniors cover their bills, but for those without a robust work history, wages earned in retirement could replace years of zero income in their Social Security benefits formula. That could lead to larger checks once the SSA is able to record and account for those wages earned later in life.

A bill seeks to do away with the earnings test

In March of 2026, Sen. Rick Scott introduced the Senior Citizens' Freedom to Work Act (S. 4184) to the Senate. Rep. Greg Murphy brought a companion bill to the House (H.R. 8344) in April. The bill aims to repeal the Social Security earnings test, allowing beneficiaries to earn as much income as they want without risking temporarily reduced benefits.

Proponents of eliminating the earnings test argue that it limits seniors' earning potential and discourages workforce participation among older Americans. The latter is an issue for Social Security itself, because the program is funded primarily by payroll tax revenue. So encouraging older people to earn more could actually benefit Social Security by increasing a key revenue stream.

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There are benefits to working in retirement without constraints

Doing away with Social Security's earnings test could benefit seniors because that way, they won't have to worry about earning too much money. It could also encourage retirees to reenter the workforce even if they're doing well financially.

Working can be a source of mental stimulation for retirees who might otherwise find themselves getting bored. Work can also serve as a social outlet, helping retirees avoid loneliness and isolation. Removing barriers to holding down a job could push more older workers back into the labor force, which would only benefit Social Security's bottom line.

The program is currently facing the possibility of benefit cuts due to a shrinking workforce and projected payroll tax revenues that won't be enough to keep up with scheduled payments. The combined reserves of the Old-Age and Survivors Insurance and Disability Insurance Trust Funds are predicted to have enough revenue to cover all scheduled costs until 2034 — then 83% of benefits would be payable.

The OASI Trust Fund reserves are also projected to run out in Q4 2032, and 78% of benefits would be payable afterward.

Removing the earnings test won't necessarily solve these problems, but it could help.

Bottom line

Holding down a job may be part of your retirement plan, whether because you need the money or because you don't like the idea of not having a way to structure your time. Social Security's earnings test does not necessarily have to stop you from working, since benefits are only withheld temporarily. And the earnings test may not even apply to you if you've reached your FRA.

But at the very least, getting rid of the earnings test could remove a world of complications for seniors. The Senior Citizens' Freedom to Work Act is currently in the early stages of the legislative process. But if it moves forward, it could do seniors and Social Security itself a lot of good.

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