Millions of Retirees Could See Their Social Security Increase if This Bill Passes

For millions of older Americans, Social Security serves as the foundation of retirement income. But with the average retired worker now receiving just $2,083 per month, many find that their monthly benefits simply aren’t enough to keep up with rising housing, healthcare, and everyday living costs.

That’s one reason a growing number of retirees continue working after they begin collecting Social Security. Some work part time to supplement their income, while others may return to full-time jobs because they need the extra money.

Earlier this year, AARP found that 7% of retirees reentered the workforce. The main driver of that trend was to make money, though a smaller percentage of people who went back to work after retiring did so to stay active.

Plus, Social Security has long done a poor job of keeping up with inflation. For many retirees, returning to work may be necessary in today’s economy.

In fact, in a recent Schroders survey, 19% of retirees described themselves as “struggling” financially. And 49% said their expenses in retirement are higher than expected. So it’s easy to see why a job may be needed to supplement Social Security.

But retirees who claim Social Security before reaching their full retirement age (FRA) face an additional hurdle when trying to go back to work in some shape or form — the program’s earnings test. A new bill, however, seeks to get rid of it.

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 younger than FRA and who won’t reach FRA by the end of the year lose $1 in benefits for every $2 they earn above $24,480.

Now to be clear, those benefits are lost temporarily, not permanently. Once the FRA arrives, withheld benefits are returned in the form of larger Social Security checks.

But on a near-term basis, losing a portion of those checks could hurt retirees who need the income. Lawmakers recognize how detrimental that can be, which is why a new bill has been introduced to get rid of the earnings test.

It’s called the Senior Citizens’ Freedom to Work Act of 2026. And if it passes, it could be huge for Social Security recipients.

Senator Rick Scott unveiled the proposal during a Senate Special Committee on Aging hearing focused on older Americans in the workforce, arguing that retirees who have paid into Social Security throughout their careers shouldn’t be discouraged from continuing to work.

Supporters of the legislation say the current earnings test is outdated because today’s retirees are working longer than previous generations. Many continue working not because they want to delay retirement, but because inflation and higher living costs have made additional income a necessity.

Although the Social Security Administration eventually returns withheld benefits under the earnings test, critics argue that many retirees either don’t understand how the adjustment works (and therefore don’t work when they need to) or can’t afford smaller benefit checks in the meantime.

Why supporters say this could be a game-changer

Backers of the legislation argue that the earnings test effectively penalizes work at a time when the economy needs experienced workers and many retirees need additional income. Rather than force retirees to carefully monitor how much they earn each year, eliminating the earnings test could let them accept additional hours or even return to full-time work without worrying about losing part of their monthly Social Security benefit.

Supporters also say the proposal could encourage more older Americans to remain in the labor force. That’s actually good for Social Security, since the program gets much of its funding from payroll tax revenue and needs funding to keep up with scheduled benefits.

Of course, the legislation still faces a long road through Congress before becoming law. But it could represent one of the most significant changes to Social Security in years, in enacted.

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