U.S. Senate Approves Legislation to Lift Social Security Earnings Limit for Seniors
March 22, 2000

Washington, DC – The U.S. Senate today unanimously approved the Social Security Earnings Test Elimination Act of 2000, legislation that would lift the Social Security earnings limit for retirees between the ages of 65 and 69.

Currently, the Social Security earnings limit is $17,000 per year for retirees between the ages of 65 and 69. For every $3 in earnings above that limit, these seniors have $1 in benefits deferred. The following is Senator Feinstein’s statement on the legislation, which she cosponsored:

“I believe the earnings limit that Social Security recipients can earn without having a portion of their benefits deferred is grossly unfair.

Last year, Senator Charles Grassley and I proposed lifting the Social Security earnings test on retirees between the ages of 65 and 69. We did not propose outright elimination because we did not think, at that time, that the surplus would be large enough to sustain elimination. Now, a year later – and thanks to our continued economic boom – I believe it is possible to eliminate the earnings test outright, and still adhere to a responsible and fiscally sound budget.

Today, more than 1 million seniors nationwide face this earnings test. My own state, California, has more seniors affected by the earnings test than any other state: 161,000, according to the Bureau of the Census.

For these 161,000 Californians – and hundreds of thousands of others all across this nation – this legislation represents an important step in removing the unfair burden that the earnings test places on seniors simply because they wish to continue working. As President Clinton said in his February 29 letter to House leaders: ‘We should reward every American who wants to and can stay active and productive.’

For example, a letter I received from the American Health Care Association holds that: ‘The nursing facilities we represent make a concerted effort to employ senior citizens to care for their peers. They’re reliable and honest workers, who have compassion for those in their care. We have had difficulty hiring or retaining these employees because of the threat of losing Social Security benefits after their annual earnings have passed $17,000.’

Elimination of the earnings test is important not just to those retirees who want to continue to work, but to those who need to continue to work and who are currently faced with a Hobson’s choice: Continue to work and have Social Security benefits reduced, or stop working and rely only on Social Security for retirement security. For far too many of these retirees – over half of those helped by this legislation have incomes less than $45,000 per year, including Social Security – both of these choices leave them financially squeezed. For women, who are twice as likely as men to retire in poverty, this is an especially important issue.

This legislation offers a third choice: Continue to work and continue to receive those Social Security benefits.

Moreover, I believe that elimination of the Social Security earnings test is warranted because the original logic of the earnings test no longer holds. Congress imposed the earnings test to provide a “disincentive” to older workers to continue to work, so as to make room for younger workers during the Great Depression. In our new, 21st Century economy, unemployment is at historic lows and firms are nearly desperate for workers.

I do not believe that passage of this legislation will address many of the long-term problems regarding the solvency of the Social Security system. We have much work remaining on that score. But for the hundreds of thousands of seniors who either need or want to continue to work past age 65, this legislation represents an important step in creating a fairer and more secure retirement.”