Rep. Posey Introduces Bill to Modify Social Security’s Earnings Test - thinkadvisor.com
Rep. Bill Posey (R- FL 08) recently introduced the “Senior Citizens Inflation Relief Act” (H.R. 7692), calling for an increase to the limit on earnings for those drawing Social Security benefits prior to their full retirement age (FRA). The bill would increase the amount workers could earn before the imposition of benefit reductions by the Social Security Administration. Under this bill, the benefit reduction would not start until monthly earnings exceed $2,046.67, rather than the current $1,630 per month ceiling. Above that amount, benefits would be reduced at the rate of $1 for every $2 of earnings.
As written, the bill would provide the increased earnings ceiling only for taxable years 2022 and 2023, with the prior limits to be reinstated beginning in 2024. As explained in a post on thinkadvisor.com by Investment Advisory Group’s Melanie Waddell, the additional amount of unpenalized earnings can be viewed as an aid during the current period of high inflation, and “could certainly make a big difference over two years. That could cover a rental increase, a car payment, several weeks’ worth of groceries, without penalizing this group of younger Social Security recipients for working and trying to make ends meet.”
The bill includes a provision, in the form of a “hold harmless” clause, to ensure that the potential increase in benefit payments resulting from the increased earnings test ceiling would not impact the Old-Age and Survivors Insurance Trust Fund.
Social Security’s Earnings Test rules can be somewhat complex for new beneficiaries attempting to develop a financial plan for the years up until their FRA. In fact, this is one of the most frequent subject areas we deal with at the AMAC Foundation’s Social Security Advisory Service. In fact, there are multiple timeframes addressed in the rules, including the first year and the year the beneficiary reaches their FRA. Know that the Foundation’s accredited Social Security Advisors are available to assist you in understanding how these rules apply to your personal situation, with a service provided free of charge. Learn more about the service via the Foundation’s website.