A bill introduced Tuesday would repeal the Social Security retirement earnings test, which "punishes workers between the ages of 62-66 who start to claim their benefits," according to Sen. Rick Scott, R-Fla., the bill's lead sponsor.
"The fact is, there are laws on the books that penalize older workers unfairly. The Retirement Earnings Test is one of them," Scott said Thursday during a hearing held by the Senate Special Committee on Aging, to discuss The Senior Citizens Freedom to Work Act.
Scott, chairman of the committee, said the RET "essentially takes away $1 of their benefits for every $2 in benefits they earn once their income hits $24,000 a year," according to a written version of his prepared remarks.
"The Retirement Earnings Test was passed during the Great Depression, SPECIFICALLY to push older Americans out of the workforce and free up more jobs for younger Americans," Scott said. "But as we are all aware — it's not the 1930's anymore, and we shouldn't expect our seniors to be punished today by outdated policies passed then."
Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare, testified at the hearing that while the group "supports the repeal of RET in concept," the group has not endorsed Scott's legislation.
As the Social Security Administration states: "If you're younger than full retirement age during all of 2026, we must deduct $1 from your benefits for each $2 you earn above $24,480. If you reach full retirement age in 2026, we must deduct $1 from your benefits for every $3 you earn above $65,160 until the month you reach full retirement age."
Repealing the RET "would represent a major change to Social Security, which requires caution on the part of the Congress," Adcock said.
A number of factors should be considered, Adcock said, including:
- The impact of repealing the RET on the solvency of Social Security's trust funds
- Whether everyone will benefit from repeal of the RET. "If some workers are worse off, are there ways to mitigate the impacts on these workers and their families?"
- Whether repealing the RET will increase participation of older Americans in the workforce as intended, given the reality of age discrimination
"Many seniors do not realize that Social Security benefits withheld under the RET are later returned to them through higher monthly payments for the rest of their lives," Adcock said in his testimony.
"For Congress, it is this element of the RET that contributes to the challenge of projecting the positive and negative impacts of repeal," Adcock added.
As Jason Fichtner, formerly the acting deputy commissioner of Social Security, testified Thursday, the RET only applies to working Social Security claimants who have not yet reached full retirement age.
Once these early claimants reach their FRA, "SSA permanently increases their monthly payments by an amount that is roughly actuarially equivalent to the withheld benefits. Benefits withheld under the RET are thus not lost but rather returned over a beneficiary's life beginning at their FRA," Fichtner continued.
"The RET is enormously complicated and most older workers are unaware of it — at least until it affects them," he added. "Even when workers have heard of it, most misperceive it as a tax and think withheld benefits do not get returned."
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