A new debate has sparked in the States about Social Security benefits and working after retirement. U.S. lawmakers are discussing whether to remove a rule called the Retirement Earnings Test. The rule currently affects people who are benefited by Social Security benefits before reaching their Full Retirement Age.
What is the Retirement Earnings Test ?
The Retirement Earnings Test is a Social Security rule that limits how much some retirees can earn from work while receiving benefits. If a person earns more than the allowed amount, part of their Social Security benefits can be temporarily withheld. The rule was first introduced during the Great Depression, according to the Economic Policy Innovation Center cited by Moneywise. The goal was to encourage older Americans to retire and create more job opportunities for younger workers.
The RET only applies to people who claim Social Security benefits before reaching their Full Retirement Age (FRA). For people born in 1960 or later, the Full Retirement Age is 67 years.
2026 income limits under the current rule
If a person is below Full Retirement Age for the entire year, Social Security will withhold $1 in benefits for every $2 earned above $24,480. If a person reaches Full Retirement Age during the year, Social Security will withhold $1 for every $3 earned above $65,160, as noted by Moneywise. In that case, only income earned before the birthday month is counted.
ALSO READ: Trump to sign crucial Social Security memo as SSA faces 2032 insolvency risk
Once a person reaches Full Retirement Age, there is no earnings limit. After reaching Full Retirement Age, benefits are not reduced no matter how much a person earns from work.
Benefits are not permanently lost
Money withheld under the Retirement Earnings Test is not gone forever. Once a person reaches Full Retirement Age, Social Security recalculates their payments. The agency increases future monthly benefits to make up for the months when payments were reduced. However, retirees who need the money immediately may still face financial pressure because their monthly checks are reduced in the short term.
New bill wants to remove the rule
Republican lawmakers are pushing to completely eliminate the Retirement Earnings Test. In April, Congressman Greg Murphy introduced the Senior Citizens’ Freedom to Work Act. The bill aims to repeal the Retirement Earnings Test. Senator Rick Scott of Florida has also backed similar legislation.
Supporters argue that older Americans should not be punished for continuing to work while receiving Social Security benefits. Congressman Greg Murphy said seniors should not face penalties because they choose to earn income and continue working, according to his statement cited by Moneywise.
How many retirees could be affected?
Around 43% of Social Security beneficiaries have earned income from work at some point, according to a 2025 study by the Center for Retirement Research at Boston College cited by Moneywise. If the Retirement Earnings Test is removed, many of these workers could receive larger Social Security payments while continuing to work.
Critics say removing the RET could increase Social Security spending. They warn that the Social Security trust fund is already facing financial pressure. Kevin Thompson, CEO of 9i Capital Group, told Newsweek that removing the rule could place additional strain on the Social Security system, as noted by Moneywise. He said lawmakers should focus more on funding Social Security instead of increasing costs.
What this means for retirees
The debate shows how even small changes to Social Security rules can affect retirement planning. There is currently no certainty about whether the rule will be changed or removed. Retirees and future retirees may need to prepare for different possible outcomes.
People who plan to work while collecting Social Security benefits may benefit from professional financial advice. Advisors can help with budgeting, taxes and benefit-planning strategies, as per Moneywise. This may be especially useful for higher-income retirees with larger retirement savings.
