A new Senate proposal would scrap one of the most confusing rules in Social Security, the provision that docks benefits when early retirees keep working and earn above a set amount.
Sen. Rick Scott of Florida, who chairs the Senate Special Committee on Aging, introduced the Senior Citizens’ Freedom to Work Act of 2026 on March 24. The bill, designated S. 4184, was read twice and referred to the Senate Finance Committee. Sen. Tommy Tuberville of Alabama signed on as the lone cosponsor. Rep. Greg Murphy of North Carolina has filed a companion measure in the House.
How the Earnings Test Works Now
Most South Carolinians can claim Social Security as early as age 62, four or five years before reaching what the agency calls full retirement age. Anyone who claims early and continues to work runs into a provision known as the retirement earnings test.
In 2026, beneficiaries under full retirement age can earn up to $24,480 from a job before the rule kicks in. Above that amount, the Social Security Administration withholds one dollar in benefits for every two dollars earned. A higher cap of $65,160 applies in the year a worker reaches full retirement age. After that birthday, the test goes away entirely.
There is an important wrinkle most people miss. The withheld money is not gone forever. Once the worker reaches full retirement age, the agency recalculates the monthly benefit upward to credit back the months that were withheld. Over an average lifespan, the math is meant to come out roughly even.
What the Bill Does
4184 is short and direct. It strikes the subsections of the Social Security Act that authorize the earnings test and walks through a series of conforming amendments to clean up cross references throughout federal law. It also repeals the parallel deduction rules that apply to retirees covered by the Railroad Retirement Act, ensuring both systems operate the same way.
If the bill becomes law, the changes would take effect for taxable years that begin after enactment. In plain terms, an early retiree could earn any amount of wages or self employment income without watching part of the monthly Social Security check disappear.
The Case for Repeal
At a March 25 hearing of the Senate Aging Committee, Scott pointed out that the earnings test traces back to the Great Depression, when policymakers wanted to push older Americans out of the workforce to make room for younger workers. He argued the policy no longer fits the modern economy.
Murphy and Scott also argue that the eventual recalculation does little good for someone trying to pay a property tax bill today. Research cited in their press materials suggests many beneficiaries do not understand the recalculation feature and assume the withheld dollars are simply lost. Faced with that belief, some workers cut their hours or leave the workforce altogether to stay under the threshold. The Association of Mature American Citizens, which has endorsed the bill, calls the test an outdated policy that does not match today’s longer working lives.
Concerns About Cost and Solvency
The Social Security Administration’s Office of the Chief Actuary has studied this question before and reached a counterintuitive conclusion. Eliminating the earnings test would raise costs in the short term because more people would draw benefits sooner, but it would lower costs over the long run because those earlier claims lock in permanently smaller monthly checks. One analysis estimated that 1.7 million workers would file for benefits earlier than they otherwise would.
Critics say the timing is troubling. The Old Age and Survivors Insurance trust fund is on track to face a shortfall in roughly the next decade, and any change that pulls money out faster deserves close scrutiny. A Congressional Research Service review also flagged that the benefits of repeal would flow disproportionately to higher earners and that some lower income beneficiaries could end up with smaller lifetime benefits if they file earlier than they would have under current rules.
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