U.S. seniors who work in retirement may be up for a bonus in the form of new legislation that seeks to end the retirement earnings test for those who are still working but are eligible for benefits.
The bill, sponsored by Rep. Greg Murphy (R-N.C.) and named the Senior Citizens’ Freedom to Work Act, aims to repeal the retirement earnings test (RET), which lowers benefits for Social Security beneficiaries who claim early retirement but who remain in the workforce and are paid above a specific threshold. There's also a companion Senate bill, S.4184, sponsored by Sen. Rick Scott (R-Fla.), that was introduced in the Senate Finance Committee.
Currently, the RET reduces the Social Security benefits early retirees are eligible to receive by about 50 percent for annual earnings above $24,480. While the reduction in benefits is returned to seniors when they reach Full Retirement Age (FRA), Murphy said that many seniors are unaware of the FRA policy and opt to earn below the income threshold.
"American seniors' ability to earn income and enjoy the dignity of work should not be penalized by arbitrary parameters to receive Social Security benefits," Murphy said in a statement. "Current law unnecessarily complicates seniors' right to access the benefits they paid into for the entirety of their careers and must be done away with. While certain guardrails are in place to ensure the viability of Social Security and incentivize participation in the workforce, the Retirement Earnings Test does neither and is a bureaucratic hurdle that does more harm than good."
Right now, if you claim Social Security early and keep working, the government withholds $1 in benefits for every $2 you earn above $24,480 a year. “Murphy's bill scraps that penalty entirely, so early retirees who still want a paycheck can collect their benefits without watching them shrink,” Chris Brooks, a money manager and co-founder of Crypto Asset Recovery, told NTD News. “For someone working part-time at 63, that's real money back in their pocket each month.’
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One factor Social Security recipients should know is that withheld benefits aren't gone forever, with or without the bill.“When you hit Full Retirement Age, Social Security recalculates and permanently bumps up your monthly check to give that money back,” Brooks noted.
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Social Security winners include early claimants between 62 and FRA who are still earning meaningful W-2 or self-employment income and who want their full monthly benefit in hand right now rather than later. “That is a real cash-flow improvement for that group,” Scott Jones, founder and financial adviser at Genesis Wealth Advisor Group, LLC, told NTD News. “It’s not, however, a windfall in lifetime benefits terms.”Passage is likely but not guaranteed
Jones said he would frame H.R. 8344’s passage as possible but not imminent. “The bill is at the introduction stage in both chambers and has been referred to Ways and Means on the House side and Finance on the Senate side,” he said. ‘That’s the very front of the legislative pipeline.”There is bipartisan precedent for the broader idea. The Senior Citizens’ Freedom to Work Act of 2000 eliminated the earnings test at Full Retirement Age and passed unanimously before former President Bill Clinton signed it. “That history shows the concept can clear both chambers when the scope is narrow,” Brooks added.
Urgency is also at play, as the 2026 Trustees Report projects that the OASI Trust Fund will be depleted in the fourth quarter of 2032, at which point only 78 percent of scheduled benefits would be payable from continuing payroll taxes. “That’s roughly six years out and the second-shortest horizon since 1982,” Jones said.
SSA actuaries have said that repealing the earnings test could actually lower trust fund costs over the long run, because restoring withheld benefits at FRA is itself an expense, though it would raise short-term outlays.
“Whether Congress treats that nuance as a feature or a problem will shape how the bill moves,” Jones added.