The Social Security Change That Could Increase Payments for Millions of Recipients

Millions of older Americans continue working after claiming Social Security, but current rules can temporarily reduce their monthly benefits.

A new bicameral proposal, the Senior Citizens' Freedom to Work Act, aims to change that by eliminating the Retirement Earnings Test (RET) for early claimants. If enacted, the legislation could increase monthly payments for many working retirees.

Here's how the rule would work and what it means for your retirement planning.

Editor's note: Legislative information is current as of publication. The Senior Citizens' Freedom to Work Act has only been introduced in Congress and is yet to become law.

What is the Senior Citizens' Freedom to Work Act?

The Senior Citizens' Freedom to Work Act is a proposed bill that aims to eliminate the Social Security RET, a rule that temporarily reduces benefits for some retirees who claim Social Security before full retirement age (FRA) and continue working.

The legislation was introduced in the Senate by Sen. Rick Scott (R-FL) in March 2026 and in the House by Rep. Greg Murphy (R-NC) in April 2026.

How the earnings test works in 2026

In 2026, the earnings threshold is $24,480 for beneficiaries who will be under FRA all year. If a person earns more than that amount, Social Security withholds $1 in benefits for every $2 earned above the threshold.

For people who reach FRA during the year, a higher threshold of $65,160 applies, with $1 withheld for every $3 earned above that limit. The withholding continues until the beneficiary turns 67.

How this looks in reality

A retiree claiming at 62 who earns $44,480 in a year — $20,000 above the $24,480 threshold — would have $10,000 in benefits withheld by the SSA that year. That's $833 per month the retiree expected to receive but won't see until after reaching FRA.

If they are depending on that income to cover expenses, the cash flow gap is immediate, even if the total lifetime benefit eventually evens out.

The withheld benefits aren't permanently lost

Many retirees believe withheld benefits disappear forever, but that's not how the rule works. Once someone reaches full retirement age, the Social Security Administration recalculates their monthly benefit to credit back the months when benefits were withheld.

Even so, losing income today might create real cash-flow problems for retirees who depend on those monthly payments.

Millions of older Americans could be affected

The share of seniors aged 65 and older who remain in the workforce has increased since 2014. According to BLS data, nearly 11.6 million Americans aged 65 and older were in the labor force in 2024. More than twice that number were working between the ages of 55 and 64.

That means a growing share of older workers could see their benefits temporarily reduced under the RET if they claim benefits early.

Why supporters want the rule repealed

Sen. Scott has described the RET as something "passed during the Great Depression, specifically to push older Americans out of the workforce and free up more jobs for younger Americans," arguing it has no place in the modern economy.

Rep. Murphy called the RET "a bureaucratic hurdle that does more harm than good," arguing it "unnecessarily complicates seniors' right to access the benefits they paid into for the entirety of their careers."

What eliminating the RET would actually do

If the bill becomes law, people who claim Social Security before full retirement age could earn any amount from work without having benefits temporarily withheld. Their monthly Social Security checks would continue regardless of employment income.

Because no benefits would be withheld under the RET, the Social Security Administration would no longer need to increase monthly payments after FRA to make up for previously withheld benefits.

What it wouldn't do

Eliminating the RET would not address Social Security's larger solvency challenge. The 2026 Trustees Report projects the OASI trust fund will deplete in the fourth quarter of 2032. Without congressional action, an automatic 22% benefit cut would affect all recipients. 

The Freedom to Work Act changes how work income interacts with early-claimed benefits, but it doesn't add new revenue to the trust fund.

The connection to a rising cost of living

Many older Americans are staying in or re-entering the workforce because everyday expenses continue to climb. Higher property taxes, homeowners' insurance premiums, utility bills, and maintenance costs are making retirement more expensive than many expected.

Supporters of the bill argue that eliminating the RET would allow these retirees to supplement their income through work without temporarily reducing the Social Security benefits they have already earned.

The proposal is still working through Congress

Although the legislation has attracted attention, it remains in the early stages of the legislative process. The Senate bill was referred to the Finance Committee, while the House version was referred to the Ways and Means Committee after introduction.

Both chambers must approve identical versions before the proposal can become law. Until then, the current Retirement Earnings Test remains fully in effect for eligible Social Security recipients.

Bottom line

The Senior Citizens' Freedom to Work Act could increase monthly senior benefits for many working retirees by eliminating the Retirement Earnings Test. For now, however, nothing has changed.

The bill has been introduced but not enacted, so retirees should continue planning under current Social Security rules while watching for future congressional action. Any eventual change would apply only if the legislation successfully completes the legislative process.

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