Retirement Social Security

New Social Security Proposal Could Boost Benefits For Working Seniors

A proposal might give seniors more flexibility to work in retirement.

By Paige Cerulli , Edited by Sara Albertelli

Updated April 29, 2026

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For many older adults, Social Security plays an important role in their retirement plan. But if seniors claim Social Security early and keep working, their benefits may be reduced, meaning they have less to live on until they reach full retirement age. Many seniors don't realize that their benefits may be reduced simply because they continue to work.

The Senior Citizens' Freedom to Work Act seeks to change that by eliminating the Social Security retirement earnings test. Here's what to know about how that bill might affect your Social Security payments if it were to become law.

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Understanding the Social Security retirement earnings test

Under the current Social Security retirement earnings test, some older adults who haven't reached full retirement age may have their Social Security benefits reduced if they continue to work. The reduction in benefits takes effect if beneficiaries earn more than a set annual limit. For 2026, beneficiaries who haven't yet reached the full retirement age could earn up to $24,480. Once they exceed that limit, the earnings test applies, and for every $2 they earn past the limit, $1 is withheld from their Social Security benefits.

The year before a beneficiary reaches full retirement age, a higher limit applies, but they may still have their benefits reduced if their earnings exceed that limit.

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What happens once beneficiaries reach full retirement age

At full retirement age, which is usually age 66 or 67, beneficiaries are eligible to receive 100% of their Social Security retirement benefits. Once Social Security beneficiaries reach full retirement age, their earnings from work no longer reduce their Social Security earnings.

What happens to the Social Security benefits that were reduced

If beneficiaries have been collecting Social Security early while working and were affected by the retirement earnings test, their benefits may be recalculated once they reach full retirement age. Beneficiaries may receive credit for the benefits that were reduced or withheld, meaning they'll eventually get that money back, but only once they reach full retirement age. If a senior has a shorter life expectancy and doesn't reach full retirement age, they might not receive those benefits back.

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How the Social Security retirement earnings test affects beneficiaries

When seniors realize that they're losing Social Security benefits if their income exceeds the retirement earnings test limit, they may see the rule as discouraging them from working. While seniors with higher incomes may be minimally impacted by the test, even small reductions in income could be significant for middle or lower-income seniors.

The benefit reduction for working comes on top of additional consequences for claiming Social Security early. If seniors claim Social Security at age 62, the earliest allowable age, their benefits might be reduced by up to 30%. The additional reduction for work income might further limit a senior's income, making it more difficult for them to afford essentials.

What the Senior Citizens' Freedom to Work Act would change

The Senior Citizens' Freedom to Work Act seeks to repeal the retirement earnings test. Repealing the test would allow beneficiaries to continue to work without their income, resulting in a reduction of their Social Security benefits. The bill might encourage seniors to continue to participate in the workforce while also giving them greater financial flexibility in retirement.

How the bill might affect the Social Security program

Eliminating the retirement earnings test might simplify the Social Security program and avoid some of the confusion that beneficiaries experience when navigating working, even part-time, in retirement.

But the change might have a significant financial impact on the program, too. Eliminating the retirement earnings test might mean that the Social Security program would have to pay out more benefits. Doing so might affect the program's funding, a particularly risky prospect given the fact that the coprogram's combined trust fund reserves are estimated to run out by 2034.

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Where the bill currently stands

Senator Rick Scott, R-Fla., and Representative Greg Murphy, R-N.C., proposed the Senior Citizens' Freedom to Work Act. On March 24, Scott introduced the bill to the Senate, and Murphy introduced the bill to the House on April 16. The Senate referred the bill to the Committee on Finance, while the House referred it to the Committee on Ways and Means.

No vote on the bill is currently scheduled, so it remains a proposal for now.

Bottom line

The idea of repealing the retirement earnings test may be appealing to many Social Security beneficiaries. In addition to giving beneficiaries more flexibility and, possibly, more earning potential, repealing the test might allow individuals to continue to work to meet personal goals or to keep themselves active during retirement.

Since the bill is just a proposal at this time, there's no guarantee of it ever passing or becoming law, and the retirement earnings test remains in place. If you're nearing retirement age, consider speaking with a financial advisor to make sure you're on track for retirement, and you understand when it makes the most sense for you to start claiming Social Security.

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