The evolution of Social Security’s “Earnings Limit”
When the Social Security program was first enacted in 1935, the rules said that a worker needed to be at least 65 years of age before they could collect benefits and, if they worked and earned any amount of wages once they started collecting, the full amount of their monthly benefit would be forfeited for each month they earn a wage. So with an initial earnings limit of $0 and a penalty equally severe, the stage was set for easing that draconian rule to recognizing that Social Security was meant as a supplemental source of retirement income, not as the only source. Thus even before the first benefit was paid in 1940, the so-called “earnings limit” rules began to evolve to what they are today – limiting earnings of only those who claim benefits early and easing the financial burden on those whose earnings exceed the limit. In this Motley Fool article by Dan Caplinger, the author takes us through a complete history of the Social Security earnings limit, and how it evolved to the rules as we know them today. Click here to read more.