By Ramatou Njoya, Policy Intern
The Senior Citizens’ Freedom to Work Act of 2026 was proposed in March of this year to address the discrepancies with the retirement earnings test and wealth gaps widened by outdated law. The new proposal would allow beneficiaries to continue working, without compromising financial security or their livelihood. With more seniors returning to the workforce than ever, the proposal reflects a much-overdue reform.
Currently, the Social Security Act penalizes many seniors who return to the workforce. For every $2 a Social Security beneficiary who claims their benefits before full retirement age earns above $24,480, they pay $1 in additional taxes. (The penalties relax once a person reaches full retirement age but still hurt). This rule, called the Retirement Earnings Test, does not apply to seniors aged 70 and older, but it’s essentially a 50 percent tax rate for those it does affect.
Senator Rick Scott (FL), the bill’s sponsor, has been vocal about the need for this reform. “Social Security was meant to keep our aging community out of poverty, not force some of our most experienced and qualified members out of the workforce,” he said in a statement. “This bill will get rid of the unfair Retirement Earnings Test so that seniors who want to stay in the workforce can do so without being punished or robbed of their hard-earned benefits.”
Experts have long criticized the Retirement Earnings Test for creating a financial disincentive for seniors who wish to supplement their income through continued employment. Under the current framework, it penalizes beneficiaries between the ages of 62 and full retirement age who earn above the threshold. By doing so, it forces people to choose between working and making ends meet. Critics, like Senator Scott, argue that it penalizes the very population it was designed to support, particularly those who rely on both wages and Social Security income to cover rising costs of living.
The Senior Citizen League’s survey research underlines just how much these penalties affect seniors. In 2026, about 79 percent of seniors claimed their Social Security benefits before the full retirement age, up from 68 percent in 2025. Claiming benefits before full retirement age can result in a 30 percent lifetime benefits reduction. Yet, many seniors claim their benefits early to address an immediate emergency rather than leave the workforce for good. Roughly one-third of respondents said they claimed early because they could not afford basic living expenses, such as rent and groceries, or needed to address a medical emergency. Notably, only 9 percent of early claimers said they were unaware their benefits would be penalized.
As a result, some seniors incur double penalties on their retirement earnings. After getting hit for retiring early, often to address a critical financial situation, they pay additional taxes when they return to work to make up the shortfall.
At TSCL, we believe Social Security was designed to provide a stable income for retirees and individuals with disabilities. However, the Retirement Earnings Test undermines this purpose by hurting people who need to return to work. This reduces the assistance available to beneficiaries, putting more financial strain on seniors. TSCL supports the proposed legislation because we acknowledge that a penalty for returning to work is not an abstract penalty. It is a financial reality millions feel forced to carry, but don’t have to accept.
