Eliminate the Social Security Earnings Limit for All Seniors
“Old” just isn’t what it used to be. We can all point to someone, be it our parent, grandparent, aunt or uncle, who is still at work well past what was once considered the “normal” retirement age. In fact, it’s increasingly more common to see productive, vibrant workers past the age of 65 or even 70. But once again, Social Security punishes them for their productivity.
The Social Security earnings limit had its origins in the Great Depression when older workers were encouraged to retire to make room for a younger workforce. It penalized workers by reducing their benefits in proportion to their earnings. In today’s economy it succeeds only in imposing a huge tax burden on working seniors who wish to supplement their often meager income.
Half the Battle Won
In April of 2000, then-President Bill Clinton signed the Senior Citizen’s Freedom to Work Act repealing the earnings limit for those seniors who had reached full retirement age. The earnings limit still exists for seniors who choose early retirement.
Why End the Earnings Limit for Early Retirees?
- Early retirees are penalized $1 for every $3 they earn over the modest earnings limit – that’s a 33% marginal tax rate.
- Over 80% of Social Security beneficiaries opt for early retirement.
- As Social Security’s full retirement age increases more and more seniors will fall in the earnings limit gap.
- Repeal will stimulate our economy by opening the job market to earners who are still in their prime years of productivity.