A new proposal would allow Social Security beneficiaries to continue working without having their benefits diminished, which could make it easier for retirees to pay off their mortgages or more easily handle other expenses like property tax burdens.
The Senior Citizens’ Freedom to Work Act was introduced in Congress earlier this year and, if enacted, would allow individuals to receive Social Security benefits without having them reduced for earning income with the elimination of the retirement earnings test.
Under current law, Social Security reduces benefits for retirees who claim before reaching their full retirement age (FRA) of 67 for most retirees. It also imposes a retirement earnings test that reduces benefits further for those who earn more than $24,480 annually – with benefit amounts lowered by $1 for every $2 earned above the cap.
While the reduction in benefits is returned to seniors when they reach their FRA, the bill’s sponsors note that seniors who may be unaware of that provision may choose to earn below that threshold to avoid the temporary reduction.
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A pair of Republican lawmakers in Congress introduced the bill on a bicameral basis earlier this spring, with Sen. Rick Scott, R-Fla., and Rep. Greg Murphy, R-N.C., backing the legislation in the Senate and House in March and April, respectively.
“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,” he added.
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A report by Realtor.com noted that the share of seniors aged 65 and older remaining in the workforce has grown since 2014 in nearly every state, with the number of working seniors increasing by 52% in the last decade as compared with the general population’s growth of 33%.
The analysis found that those increases coincided with the most expensive housing markets in the country, such as areas in the Northeast.
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Realtor.com said that trend suggests that rising costs for insurance, property taxes and maintenance are putting pressure on older homeowners to continue working longer. Eliminating the retirement earnings test could help with those expenses as well as paying off any outstanding mortgage debt.
“This bill will get rid of the unfair retirement earnings test so that seniors who want to stay in the workforce can do so without being punished or robbed of their hard-earned benefits,” Scott said during a Senate aging committee hearing in late March.
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