U.S. sparks new debate social security benefits and work after retirement. U.S. lawmakers are debating whether to eliminate a rule called the “retirement income test.” The rule currently affects people who receive Social Security benefits before reaching full retirement age.
What is the retirement income test?
The retirement income test is a Social Security rule that limits how much some retirees can earn from working while receiving benefits. If a person’s income exceeds the allowed amount, a portion of a person’s Social Security benefits can be temporarily withheld. The rule was first introduced during the Great Recession, according to Moneywise, citing the Center for Economic Policy Innovation. The goal is to encourage older Americans to retire and create more jobs for younger workers.
RET only applies to people who receive Social Security benefits before reaching full retirement age (FRA). For those born in 1960 or later, the full retirement age is 67.
2026 income limits under current regulations
If a person is below full retirement age for an entire year, Social Security will withhold $1 in benefits for every $2 in earnings over $24,480. According to Moneywise, if a person reaches full retirement age within a year, Social Security will withhold $1 for every $3 in income over $65,160. In this case, only the income earned before the birthday month is calculated.
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Once a person reaches full retirement age, there are no income limits. After reaching full retirement age, benefits do not decrease regardless of how much a person earns from work.
Benefits are not permanently lost
Money withheld under the retirement income test isn’t gone forever. Once one reaches full retirement ageSocial Security recalculates their payments. The agency increases future monthly benefits to make up for the months when payments are reduced. However, retirees who need the money immediately may still face financial stress as their monthly checks decrease in the short term.
New bill looks to do away with that rule
Republican lawmakers are pushing to eliminate the retirement income test altogether. In April, Congressman Greg Murphy introduced the Seniors Free to Work Act. The bill seeks to repeal the retirement income test. Florida Senator Rick Scott also supports similar legislation.
Supporters argue that older Americans should not be penalized for continuing to work while receiving Social Security benefits. Moneywise cited a statement from Congressman Greg Murphy saying seniors should not face penalties because they choose to earn an income and continue to work.
How many retirees might be affected?
Moneywise cites a 2025 study from Boston College’s Center for Retirement Research showing that about 43% of Social Security recipients have earned income through work at some point. If the retirement earnings test were eliminated, many of these workers could receive larger Social Security benefits while continuing to work.
Critics say removing RET could increase social security expenditures. They warned that the Social Security trust fund was already under financial pressure. Kevin Thompson, CEO of 9i Capital Group, told Newsweek that removing the rule could put additional pressure on the social security system, as Moneywise noted. He said lawmakers should focus more on funding Social Security rather than increasing costs.
What this means for retirees
The debate shows how even small changes in Social Security rules can impact retirement planning. It is uncertain 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 receiving Social Security benefits may benefit from professional financial advice. According to Moneywise, advisors can help develop budgeting, tax and benefit planning strategies. This may be particularly useful for higher-income retirees with larger retirement savings.
