Leahy Hails Senate Vote To Repeal Social Security Earnings Test

March 22, 2000

WASHINGTON (Wed., March 22) -- The U.S. Senate Wednesday unanimously approved a bill that will repeal the Social Security earnings test for those reaching the normal retirement age, retroactive to Jan. 1, 2000.

Sen. Patrick Leahy, who voted for the bill, issued this comment after the vote:

"The earnings test dates back to the Depression era, and the needs of seniors and the makeup of the workforce are far different today. With people living longer and healthier lives today, seniors do not always retire when they reach 65. This bill and this strong vote by the Senate will allow seniors to continue working while also receiving the full Social Security benefits they deserve. This is a sensible step that will directly improve the lives of many seniors in Vermont and across the nation."

[The bill now goes to House-Senate conference to resolve minor differences in the versions passed by the Senate and the House, and President Clinton, who called for repeal of the earnings test in his 1999 State of the Union Address, is expected to sign the bill when it reaches his desk. BACKGROUND ON THE EARNINGS TEST: When someone reaches the normal retirement age (currently 65 and rising to 67 by 2027), a portion of employed seniors' Social Security benefits are deferred if their earnings exceed the "earnings limit." Under current law, the earnings limit is $17,000 this year, rising to $25,000 in 2001, $30,000 in 2002, and indexed after that. For seniors of age 65 to 69, benefits are deferred by $1 for every $3 that their earnings exceed the limit. This threshold applies to wages and self-employment income, not to "unearned" income such as pensions, savings and investments. Employed seniors whose benefits are reduced under the earnings test receive a delayed retirement credit (DRC), which boosts future monthly benefits to compensate for the loss in earlier years.]