(The Center Square) – For many older workers, taking Social Security and continuing to work are essential.
Solvency of the federal insurance program created in the 1930s Depression and fairness to seniors willing to stay in the workforce are intertwined.
U.S. Rep. Greg Murphy, R-N.C., wants seniors to keep more of their money. He introduced the Senior Citizens’ Freedom to Work Act, a bill that would repeal the retirement earnings test for beneficiaries that claim early retirement.
The provision cuts benefits in half for those earning more than $21,240. While the reduction in benefits is returned to seniors upon reaching full retirement age, many are unaware and choose to earn below the threshold.
Alan Porter, financial planner with Strategic Wealth Strategies in Fayetteville, said the change will benefit struggling seniors who “don’t have a choice” about continuing to work, but could compound problems plaguing the Social Security system.
“It will definitely help the people on Social Security, but it won’t help the system,” Porter said, adding that many seniors have opted for early retirement while continuing to work to keep up with rising costs. “If people are making more money and not putting it back in it’s going to make it worse, but they have to do something for the seniors.”
Murphy contends “American seniors’ ability to earn income and enjoy the dignity of work should not be penalized by arbitrary parameters to receive Social Security benefits.”
“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,” he said. “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.”
A recent report from the Committee for a Responsible Federal Budget shows that without significant changes, Social Security is on track for a 23% across the board benefit cut in 2033 when the Social Security retirement fund becomes insolvent.
The potential cut would equate to as much as $17,400 annually for a typical newly retired dual-income couple, or a $13,100 cut for a typical single-income couple, according to the report.
The Committee for a Responsible Federal Budget expects “senior poverty would rise significantly upon insolvency.”
The late Indiana Republican Rep. Jackie Walorski introduced a previous version of the Senior Citizens’ Freedom to Work Act in the 117th Congress before she and others were killed in a head-on collision last August.
The 2023 legislation is sponsored by Murphy and Republican Reps. Tom Tiffany of Wisconsin, Diana Harshbarger of Tennessee, Beth Van Duyne of Texas and Claudia Tenney of New York.
“I’m proud to join Rep. Greg Murphy in introducing the Senior Citizens’ Freedom to Work Act, which will keep seniors’ retirement benefits whole if they choose to continue working,” Harshbarger said. “This important legislation will simplify retirement planning, boost needed workforce participation among older Americans, and improve the livelihoods of seniors throughout the country.”
