Congress Weighs Ending Social Security Earnings Test as 24% Benefit Cut Looms by 2032
Updated
Updated · capitolskyline.com · Jul 7
Congress Weighs Ending Social Security Earnings Test as 24% Benefit Cut Looms by 2032
3 articles · Updated · capitolskyline.com · Jul 7
Summary
$24,480 in annual earnings now triggers benefit withholding for Social Security claimants below normal retirement age, and Congress is considering scrapping that rule entirely.
Murphy and Scott's Senior Citizens’ Workplace Freedom Act would end the Retirement Earnings Test, which withholds $1 for every $2 earned above the limit — or $1 for every $3 above $65,160 for those reaching retirement age in 2026.
Supporters say the change reflects a labor market in which 43% of beneficiaries combined wages and benefits at some point from 1992 to 2022, and could keep more older Americans working.
Critics warn repeal would raise near-term payouts from a trust fund already under strain, potentially hastening insolvency and deepening projected across-the-board benefit cuts.
Current projections show Social Security could face a 24% benefit reduction by 2032, leaving lawmakers to balance work incentives against the program’s long-term finances.
Should working seniors get a pay boost now if it risks deeper benefit cuts for all retirees later?
How could paying more benefits to working seniors today possibly save Social Security for tomorrow?
If Social Security already repays withheld earnings benefits, what problem does this new bill truly solve?
Social Security’s Retirement Earnings Test in 2026: Congressional Repeal Efforts, Solvency Crisis, and What Americans Need to Know
Overview
In July 2026, Congress is actively considering the Senior Citizens’ Freedom to Work Act of 2026, which would repeal the Social Security Retirement Earnings Test (RET) and remove the current earnings limit for beneficiaries who work before reaching Full Retirement Age. This change aims to eliminate a key disincentive that discourages older Americans from staying in the workforce. While repealing the RET would increase Social Security trust fund outlays in the short term, actuaries project it could lower long-term costs by avoiding the need to restore withheld benefits later. The bill’s progress depends on how lawmakers weigh these financial effects.