Public policies enacted since the 1980s with respect to retirement have played an important role in incentivizing work at older agesfor instance, by raising the age at which full Social Security benefits can be claimed and ending the earnings test
at that age for those who wish to continue working while receiving benefits.
If an individual re-enters the workforce prior to full retirement age (FRA) -- currently 66 years old -- he or she will be subject to a Retirement Earnings Test
, which temporarily reduces current benefits if earned income received is above certain thresholds," Landsberg says.
At these ages, workers face a Social Security earnings test
that reduces benefits above a certain earnings threshold; lost benefits are subsequently returned to workers in the form of a benefit increase, but this feature of the program is not well known.
When the monthly earnings test
applies, regardless of the amount of annual earnings, the beneficiary gets full benefits for any month in which earnings do not exceed the monthly exempt amount, and the beneficiary does not perform substantial services in self-employment.
earnings will be subject to the retirement earnings test
Until 2000, the Retirement Earnings Test
(RET) reduced the net Social Security benefits of some senior citizens who had income from working.
Since there is no COLA, the statute prohibits a change in the maximum amount of earnings subject to the Social Security tax, as well as the retirement earnings test
Seniors working past the retirement age of 67 should not be subject to the payroll tax, and the retirement earnings test
should be eliminated, so that seniors can work full-time without losing out on Social Security benefits.
t]) affect both AIME computation and the earnings test
for OA benefits.
A report from the New York State Bar Association Tax Section, Report on Proposals for Guidance With Respect to Passive Foreign Investment Companies, at 26-40 (5/22/01), has a series of proposals for adopting the unreasonable accumulation of earnings test
18) Finally, the Social Security earnings test
may discourage work at older ages.
3) Jonathan Gruber and Peter Orszag, however, found opposite results, with little or no significant effect of the earnings test
among men, but some evidence of an effect for women.