Retirement Social Security

Congress Wants to End the Social Security Rule That Costs Working Retirees Thousands

A new bill might help working retirees keep more of their benefits.

By Paige Cerulli , Edited by Laura Hohenstein

Updated Sept. 18, 2026

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Millions of Americans claim Social Security senior benefits while continuing to work, using those benefits to supplement their income. But doing so also comes with a potential benefits reduction. A new bill seeks to change that, allowing individuals to work and claim benefits without having those benefits withheld.

If you or a loved one are considering claiming benefits and continuing to work, this bill might help you avoid a benefits reduction. Here's what you should know about how it might work.

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How common it is to work and collect Social Security benefits

Many Americans continue to work and collect Social Security benefits. The Center for Retirement Research at Boston College found that from 1992 to 2022, 43% of Social Security beneficiaries paired work earnings with benefits at some point.

The Bureau of Labor Statistics reports that about 20% of people aged 65 and older worked in 2024, and Social Security Administration data indicates that 58.4 million people within that same age group received Social Security, SSI, or both benefits in January 2026.

Individuals might continue to work past retirement age to save more money for retirement and make catch-up contributions to retirement. Others might do consulting on a part-time basis to make money and stay busy.

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What the Retirement Earnings Test does

The Retirement Earnings Test (RET) allows the Social Security Administration (SSA) to pull back some benefits from people below the normal retirement age who claim benefits and still earn an income. The threshold for the RET changes each year; in 2026, it's $24,480 for anyone who reaches their full retirement age in 2027 or later. If an individual exceeds the income threshold, the SSA withholds $1 in benefits for every $2 they earned above the cap.

The RET is more forgiving for people who reach their full retirement age in 2026. Their RET threshold is $65,160, allowing individuals to earn more. Plus, the SSA withholds just $1 in benefits for every $3 individuals earn in excess of that threshold.

There are no income limits and no benefits withholdings for anyone above their full retirement age, allowing them to work full-time and collect their full benefits.

Justification for eliminating the RET

Representative Greg Murphy and Senator Rick Scott introduced the Senior Citizens' Freedom to Work Act in April 2026 to address the impacts the RET has on individuals. If passed, the bill would repeal the RET, allowing individuals to continue to work while claiming benefits.

Critics of the RET argue that it disincentivizes older adults from remaining in the workforce.

"The federal government should not penalize older Americans or make it harder for them to remain in the workforce," says Rachel Greszler, a visiting fellow at the Economic Policy Innovation Center.

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Arguments against eliminating the RET

Others argue that eliminating the RET might put additional strain on the Social Security trust fund, which is already projected to become depleted by the fourth quarter of 2032. If the trust fund becomes depleted, benefits may have to be automatically reduced. Even if the RET were eliminated now, those same individuals claiming benefits while working might still face a benefits reduction in 2032.

"If this gets passed, it's another hit to the system," Kevin Thompson, CEO of 9i Capital Group, said to Newsweek. "And with the current direction of Social Security, I wouldn't bet against this being one more step toward accelerating its long-term strain."

What happens to the money withheld under the RET

The benefits withheld under the RET aren't permanently lost. Instead, they're recalculated once an individual reaches their full retirement age. Then, those benefits are added back into the individual's monthly payments.

Keep in mind that the RET affects individuals who claim Social Security benefits before they reach the full retirement age. Claiming benefits early has its pros and cons. If an individual passes away young, claiming benefits early may make financial sense. But claiming benefits early also results in a permanent benefit reduction, so it's important to carefully consider which option is right for you.

Additionally, working while collecting benefits may increase your income, which may have tax implications. If your combined income becomes too high, you might have to pay taxes on some Social Security benefits, so consider speaking with a tax professional to review your income and how it might impact your taxes.

Bottom line

The Senior Citizens' Freedom to Work Act still needs to work its way through the legislative process and is not yet law, so at this time the RET remains in effect. If you're nearing retirement age, it's important to sit down and review the RET rules that apply to you. Then, do some math to calculate how much you might earn if you continue working, how your benefits might be affected, and whether you might see additional tax implications.

You might decide that continuing to work may help you reach your retirement goals, but just make sure you understand all of the impacts that working and collecting Social Security might have.

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