This new bill could let certain retirees keep more of their Social Security - but there's a catch

For millions of retirees, work doesn't end when Social Security begins. A long-term Boston College study found that 43% of participants worked while collecting Social Security at some point, showing that many people continue earning income after claiming senior benefits.

But if you claim before full retirement age, earning above the annual limit can temporarily reduce your monthly Social Security check.

A new bill in Congress would eliminate that earnings test, potentially allowing some retirees to keep more of their Social Security while they continue earning an income. Here's what the proposal would change and who it could affect.

The rule that can reduce your Social Security check

If you claim Social Security before full retirement age and keep working, Social Security withholds $1 in benefits for every $2 you earn above $24,480 in 2026.

For people reaching full retirement age during 2026, the earnings limit rises to $65,160, and the withholding changes to $1 for every $3 earned above that amount. Note that wages and self-employment income count toward the limit, but pensions and investment income don't.

Why many early claimers still rely on a paycheck

In one Social Security example, a retiree earning $33,400 while receiving $800 a month in benefits would have $4,460 withheld over the course of the year because of the earnings test.

Boston College researchers found this kind of squeeze is common among people who claimed early, since median earnings for that group dropped from about $38,700 at age 56 to roughly $16,500 three years after claiming.

At full retirement age in 2026, Social Security replaces about 42% of pre-retirement earnings for a middle-income worker, leaving many retirees combining a paycheck with their monthly benefit.

For those who claim early, earning above the annual limit can reduce the Social Security income they're counting on while they continue working.

The new proposal would eliminate the earnings test

The Senior Citizens' Freedom to Work Act of 2026 would eliminate the retirement earnings test altogether. Sen. Rick Scott introduced the bill in March 2026, saying it would "get rid of the unfair Retirement Earnings Test" for seniors who want to remain in the workforce. Rep. Greg Murphy introduced a companion bill in the House a few weeks later.

Supporters argue the current rule keeps some retirees from working as much as they otherwise would. Jason Fichtner, a former Social Security Administration official, told the Senate Aging Committee in March 2026 that the earnings test is "overly confusing" and that many people mistake it for a permanent tax instead of a temporary withholding.

Withheld benefits get credited back after full retirement age

Note that benefits withheld before full retirement age are not lost permanently. Once you reach full retirement age, Social Security recalculates your benefit and raises your monthly check to account for the months when benefits were withheld.

A larger monthly benefit later doesn't always solve the immediate challenge, though. If you're counting on that income while you're still working, having part of your check withheld can make it harder to cover monthly expenses, even if the money is eventually paid back through a higher benefit.

Proponents of the current system argue that removing the earnings test could encourage more people to claim Social Security earlier. While they would no longer have benefits withheld for working, claiming before full retirement age still permanently reduces the monthly benefit they receive throughout retirement.

Social Security's trust fund is already running low on time

Social Security's retirement trust fund is already projected to run short of reserves in the fourth quarter of 2032, according to the 2026 Trustees Report. After that, incoming revenue would cover roughly 78% of scheduled benefits, which works out to about a 22% cut if Congress doesn't step in.

Repealing the earnings test wouldn't help that timeline. In fact, the Social Security Chief Actuary estimated that a nearly identical bill introduced in 2019 would move the trust fund's projected depletion date forward by about one year.

The same estimate found that the proposal would slightly improve Social Security's finances over 75 years because people who claim earlier receive permanently smaller monthly checks. Over time, those lower benefits help offset much of the added cost of repealing the earnings test.

Bottom line

The Senior Citizens' Freedom to Work Act could make it easier for some retirees to keep working without temporarily losing part of their Social Security benefit. At the same time, it would remove a rule that supporters believe discourages work and critics say helps protect Social Security's finances.

The proposal still has a long way to go in Congress, but if it becomes law, the earnings test would no longer be part of the claiming decision. That could make it easier for future retirees to build a retirement plan around both employment income and Social Security.