Millions of Retirees Could See Their Social Security Increase if This Bill Passes
A new Senate bill could fundamentally reshape how Social Security works for retirees who go back to work, and the stakes for millions of older Americans living on tight budgets could not be higher.
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For millions of older Americans, Social Security serves as the foundation of retirement income. Yet with the average retired worker now collecting about $2,083 per month, those monthly checks frequently fall short of what it takes to cover rising housing, healthcare, and everyday living costs.
That gap is one reason a growing number of retirees continue working after they begin collecting benefits. Some take part-time jobs to fill in the margins, while others return to full-time positions because the math simply doesn’t work without additional income.
A February 2026 AARP survey found that 7% of retirees had reentered the labor force in the prior six months. Nearly half, at 48%, said their primary motivation was financial: they needed the money. Only 14% said they went back to work to stay active.
Social Security has long struggled to keep pace with inflation, and many retirees are feeling the consequences of that shortfall. The Schroders 2026 US Retirement Survey, conducted among 1,500 US investors including 382 retirees, found that 19% of retirees describe themselves as “struggling” financially, and 49% say their retirement expenses are running higher than they expected. A further 58% admit they don’t know how long their savings will last. Those numbers make clear why supplemental work income has become a necessity for so many.
But retirees who claim Social Security before reaching their full retirement age (FRA) face an added complication when they try to return to work: the program’s retirement earnings test. A new bicameral bill seeks to eliminate it entirely.
New bill would eliminate the Social Security earnings test
Social Security’s earnings test applies to recipients who have not yet reached FRA. In 2026, beneficiaries who are below FRA for the full year lose $1 in benefits for every $2 they earn above $24,480. For those who reach FRA during the year, a more generous threshold of $65,160 applies, with $1 withheld for every $3 earned above that limit in the months before their birthday month.
Those reductions are temporary, not permanent. Once a beneficiary reaches FRA, the Social Security Administration recalculates their benefit to account for the months of withholding and adds those funds back in. But for retirees already stretched thin, absorbing reduced checks on a monthly basis, even temporarily, can cause real financial hardship.
Lawmakers on both sides of Capitol Hill have introduced companion bills to eliminate the test. Senator Rick Scott introduced S.4184, the Senior Citizens’ Freedom to Work Act of 2026, in the Senate on March 24, 2026, with Senator Tommy Tuberville as a cosponsor. Representative Greg Murphy (R-N.C.) followed with H.R. 8344, the House companion bill, introduced in April 2026. Scott unveiled the Senate proposal at a Senate Special Committee on Aging hearing focused on older Americans in the workforce, arguing that retirees who paid into Social Security throughout their careers should not face a financial penalty for choosing to keep working.
The earnings test has deep historical roots. It was first enacted during the Great Depression specifically to push older Americans out of the labor force and free up jobs for younger workers. Supporters of repeal argue that such Depression-era logic has no place in a modern economy where experienced workers are in demand and rising costs have extended working years well beyond what previous generations ever anticipated.
Critics of the current test also point to a transparency problem. Although the Social Security Administration eventually returns withheld benefits, many retirees don’t fully understand how the adjustment works and, as a result, cut back on work unnecessarily or give up wages they could have earned without any permanent cost to their benefits.
Why supporters say this could be a game-changer
Backers of the legislation argue that the earnings test effectively penalizes work at a moment when the economy needs experienced workers and many retirees need additional income. Eliminating it would allow beneficiaries to accept more hours or return to full-time employment without having to track their wages against a federal threshold each year.
The proposal also carries a long-term argument for Social Security’s finances. Encouraging more older Americans to remain in the labor force means more payroll tax contributions flowing into the program, which relies heavily on that revenue to meet its scheduled benefit obligations.
As of mid-2026, both bills remain in the early stages of the legislative process, awaiting committee consideration before either chamber can take a floor vote. The road to enactment is long, but the legislation represents one of the most substantive proposals to modernize Social Security’s work rules in years, with support in both the Senate and the House.
Editor’s note: This update corrects the article’s description of the legislation as a single Senate bill. The Senior Citizens’ Freedom to Work Act of 2026 is bicameral: Senator Rick Scott introduced S.4184 in the Senate on March 24, 2026, with Senator Tommy Tuberville as cosponsor, while Representative Greg Murphy introduced companion House bill H.R. 8344 in April 2026. The earnings test’s Great Depression origins and the 2026 Schroders survey’s finding that 58% of retirees don’t know how long their savings will last were also added.
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Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and CNN Underscored.
